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Are FAKO credit scores worthless?

Are the 'educational scores' offered by free services like Credit Karma of any value if they're not the credit scores that lenders see?

By MSN Money Partner Mar 8, 2012 10:41AM

This post comes from Rob Berger at partner blog The Dough Roller.


The Dough Roller on MSN MoneyRecently a number of readers have dismissed free credit score services like Credit Karma, Quizzle and Credit Sesame, noting that those services don't provide you with your "official" FICO score.


The argument goes like this: These FAKO scores, as they're called, don't show you the actual credit score that lenders will use. Therefore, the scores are worthless. Even worse, they may mislead consumers into thinking that their "real" FICO scores are better or worse than they really are.


There are several implicit claims within this argument:

  • The FICO score you can get for a fee is the same score a lender will see when you apply for a loan or credit.
  • The FAKO score (called an "educational score" in the industry) is at best unreliable and at worst misleading.
  • The only reason to get your credit score is in preparation for applying for a loan.

You can probably guess what I think about the FAKO versus FICO controversy. The truth is that the FICO score you can get access to is almost certainly different from what a lender will see (read my article about credit scores and a recent article I wrote for H&R Block to see why). And free services that offer educational scores are a good proxy for your FICO score and a great way to understand and improve your credit.


To test that, I decided to undertake an experiment. Because I refinanced my home mortgage and three rental properties, I already had my official FICO score from two different credit agencies. So I decided to buy my FICO score from myFICO and get my scores from Quizzle, Credit Sesame and Credit Karma. With those scores in hand, I could then compare them. (Post continues below.)

My expectation was that all of these scores would be different. But I also expected the scores to be in a tight range of 20 to 30 points. Here were the results:


Official credit scores

My credit scores obtained for the refinances varied, but not by a lot.

  • Equifax FICO score: 757.
  • TransUnion FICO score: 750.

These scores were pulled about two weeks apart, so that could explain the difference. They were taken from two different credit-reporting agencies, which could also explain the difference.


I pulled my FICO scores via myFICO from both TransUnion and Equifax on the same day. The results were off by just four points.

  • TransUnion: 745.
  • Equifax: 741.

As you can see, however, both scores varied from the scores the mortgage companies had. One might ask if a difference of 10 to 20 points really matters. The short answer is absolutely. As you'll see in my article on what credit score you need to buy a home, the interest rate you'll get can vary significantly between a score of, say, 750 and 760. Rates don't change every 10 points, but if you go below certain thresholds, the rates can rise.


My FAKO scores

My FAKO scores were all higher than the official scores used by the lenders during my refinancing binge.

  • Quizzle: 786. Quizzle offers what's called a CE credit score that's based on your credit report from Experian with a range of 350 to 850.
  • Credit Sesame: 773. Credit Sesame uses Experian's National Equivalency Score with a range of 360 to 840.
  • Credit Karma: 760. Credit Karma provides a TransRisk score, which is based on your TransUnion report and has a range of 300 to 850.  

So, out of the three FAKO scores, Credit Karma came the closest to the FICO scores used for my refinancing. What's interesting for our purposes is that my Credit Karma score was closer to the actual score used by the mortgage lender than my FICO scores from myFICO.


What does it all mean?

An educational credit score can be a very helpful tool to understand your credit and improve your score. Don't let people who call the scores "FAKO" deter you from taking advantage of these free services.


If you are planning to buy a home in the next year or two, sites like Credit Karma have one additional advantage -- free credit-monitoring service. The last thing you want is something showing up on your credit report by mistake. With credit-monitoring services, you'll know each time a change is made to your report.


If I were concerned about my credit scores, I'd take advantage of Credit Karma, Quizzle, and Credit Sesame.


More on The Dough Roller and MSN Money:

Jun 11, 2012 7:11AM
Hi Rob,
You said your lender pulls were:
Equifax FICO: 757
Transunion FICO: 750

Then you said the myfico FICO scores were:
Equifax: 741
Transunion: 745

You concluded the results were off by only four points. However, the difference in your Equifax scores from lender pull and myfico pull was 16 points, and the difference in your Transunion scores from lender pull and myfico pull  was 5 points, based upon the above information. If the four points you mentioned referred to the difference in your myfico pulls of 741 and 745 between two different lenders, why is that even relevant?

The Quizzle and Credit Sesame are fakos based upon Experian Fico which you did not provide scores for, so they were irrelevant to this discussion.

Credit Karma, a fako based off Transunion, gave you a score of 760.
The Credit Karma score was ten points off of your lender pull of 750, while your myfico pull of 745 was only five points off. This would mean that your myfico Transunion pull was closer to your lender pull than your Credit Karma score, opposed to the other way around.

Not really certain as to what is going on with your calculations and conclusions, but please correct me if I am wrong. Thanks very much.

Jun 14, 2012 1:58PM
If I am reading article right, author made newbie mistake of pulling your lender scores and then getting various FICOs/FAKOs.  You should have done it the other way around so inquiries wouldn't be a factor.
Feb 28, 2014 2:29PM

FAKO scores are worthless for estimating your future interest expenses, predicting your ability to obtain credit or qualify for employment, rental agreements, or other contracts with credit rating requirements, or for attempting to repair or improve your credit.  Over time, they may have a very limited use in detecting fraud.

If the bureaus allowed us to see our true FICO scores and how they were calculated, it would make the whole credit reporting scheme a much less effective weapon for controlling our behavior.

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