All About Credit Cards

FACT (Fair and Accurate Credit Transactions Act of 2003) also includes a provision about credit scores, but it doesn’t make the scores free. Instead, the law states that consumers have the right to obtain a score from the credit-reporting companies and allows the companies to charge a reasonable fee for the scores. However, there are a number of different types of credit-scoring systems. The one with which many people are most familiar, the FICO score, is produced by Fair Isaac (NYSE: FIC) using information it obtains from the credit-reporting companies. In addition, there are other scores that are used specifically for borrowers seeking mortgage loans, as well as a score that the credit-reporting companies calculate for educational purposes.

One problem with FACT is that you may not get access to your FICO score. In some cases, the score you’ll get under FACT may be one of the educational scores calculated by the credit reporting companies. Although Equifax gives consumers the ability to purchase their FICO score, the other companies may provide you with a different score based on other methods. The existence of other types of credit scores can be extremely confusing, especially because the scores you get may not be the ones lenders use to make credit decisions. In addition, the range of possible score values differs depending on which company produced the score. For instance, while a FICO score can range between 300 and 850, Experian’s credit score falls between 330 and 830, and the score that TransUnion produces can be anywhere between 150 and 934. Because these ranges largely overlap, they can mislead consumers into believing that they can make comparisons among their various scores, when in fact the scores are calculated differently and therefore are best considered independently from each other.

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