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Posted: 1:37 p.m. Thursday, June 23, 2011

Your real credit score explained

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So often, people will stop me on the street to say, "Oh, my credit score is 900" or "It's 882." But when I ask them exactly which score they're talking about, no one knows!

The true score is your FICO score, but there are about a zillion other different ones out there from a variety of marketing outfits. A particularly common one that people mistake for the FICO score is the VantageScore, an alternative that has no applicable use in the marketplace right now.

But no matter which score you just got, the key is what scale is your score on? By knowing where the scale tops out, you can get a sense of how your score relates. Some services will even give you a letter grade to give you a feel of where you are with your credit.

The real deal remains, as I said, the FICO score. That goes on a scale of 850 points. You have different FICO scores with each of the three main credit bureaus -- Equifax, Experian and TransUnion. The credit score most used by lenders is the Equifax FICO score.

Recently, I applied for a mortgage. The lender pulled my credit reports and scores from all three bureaus. My scores from all three were so far apart! The lowest one was more than 100 points below the highest one because of a serious reporting error that I had to have corrected.

As a general rule, with the FICO score, you're good if you have a score of above 700. Above 740, it's even better. Above 760, the banks should be asking you to borrow money!

Meanwhile, a regional bank on the East Coast called M&T has a new offer for customers where they can pay a monthly subscription fee of $3 ($36 annually) for unlimited access to their Equifax FICO score.

Now, I can't think of a reason why you would need to continually check and be obsessed with your FICO score that much. In fact, I prefer that you just take advantage of the free annual copies of your credit report via AnnualCreditReport.com. That is generally enough. No need to go overboard accessing your score on a monthly, weekly or even daily basis!  

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