Barry Paperno serves as consumer affairs manager for myFICO.com and community manager for the myFICO Forums online community. He has assisted consumers and advised lenders on FICO credit scoring for the past 16 years.
Before joining FICO, Barry managed consumer operations for Experian Information Solutions. He holds a Bachelor of Science degree in business administration from California State University, East Bay.More consumers are getting a free glimpse at their credit scores, thanks to new federal rules that went into effect July 21. Consumers who were denied credit or got unfavorable terms must receive from lenders the credit score used in the lending decision and information related to the score.The new disclosure rules also are making the most widely used credit score, the FICO score, even more accessible to consumers. Barry Paperno, consumer affairs manager at myFICO.com, pulls back the curtain on the mysterious three-digit number and explains the basics of the FICO credit score in this Q&A with Bankrate.com.What is a FICO score?
A FICO score is a three-digit number between 300 and 850 that summarizes a person's credit risk based on their credit report at a particular point in time. The number tells a prospective lender how likely someone will pay on time, with higher scores indicating lower risk and with lower scores indicating higher risk. What the score looks at on a credit report is how the person pays, how much he or she owes, how long they have credit, to what extent any new credit has been taken on and the different types of credit experience they've had. Information the score doesn't look at on a credit report includes marital status, gender (and) race. It doesn't even look at the name or address, so the location has no bearing on it. Another thing it doesn't look at that is commonly misunderstood: It does not look at income or assets or anything like that.What is the relationship between FICO and the three credit bureaus?
FICO is not a credit reporting agency. We have a relationship with the bureaus so that when it comes to developing FICO scores, they provide the credit data that are used to develop the scores. They provide that to FICO, and FICO does the analysis of that data.So when you request your credit report, that request, whether you go through myFICO or one of the other sites, that will ultimately go to the credit bureau where they will pull the credit file, calculate a score and that will be delivered back to you the consumer or the lender.Why do the scores differ by credit bureau?
There are two primary reasons. No. 1, the data can vary. Your credit report on a particular day at one bureau can have slightly different information than at another. For example, you may have made a credit card payment that is showing updated at one bureau but one (bureau) hasn't yet, or there may be a collection action reported to one and not the other.While the scores are very similar from credit bureau to credit bureau in that they look at the same information on the credit report, how you pay, how much you owe and so forth, when we develop the score for that particular bureau, the points associated with a particular factor can vary. If the data at one bureau say a late payment tends to have a particular impact on a person's ability to pay on time -- that may be a slightly different impact than the data from another bureau. That's why you could, on the same day, get your credit scores from two different bureaus and they can be different.How often do these scores change?
Scores are calculated each time they're requested as opposed to being calculated and stored somewhere and then retrieved. So, if I request my credit score today, the credit bureau I go to will access my credit file, will calculate the score and send it to me. If I go back tomorrow for my score, it will go through the same process and it will calculate it again. Now that score may be the same if nothing changed on my credit report, but it will always go through the same process. So, if you go to a mortgage broker and you get your score today, (and) you then go to another mortgage broker (and) they pull your score, the first one will calculate it at that moment; the second one will calculate it again as if it hadn't been calculated before.How can I see my FICO score?
To get your own score you can go through a site such as myFICO.com where the Equifax and TransUnion FICO scores are available. Equifax also makes the Equifax FICO score available on its Equifax.com website. Also, mortgage applicants receive a score disclosure that shows the scores and the models and the various factors that are impacting the scores. After recent legislation, consumers also are now able to access their scores if they either do not receive the best terms lenders offer or if they are denied credit. Some credit card companies provide their online customers with FICO scores on a monthly basis and that type of thing. There are a lot of credit scores out there that are available through other sources, but for the most part, those are not actual FICO scores -- they are other credit scores developed by other companies.There is no site you can go to get your score from Experian -- not proactively as a consumer. Experian is not making their scores available to consumers in the same way that Equifax and TransUnion are. If you are a mortgage applicant or (are) turned down for credit and an Experian score was accessed, you will receive that score as part of that process.