FICO vs FAKO – What’s the difference?

Credit Repair, FAKO, FICO


Do you understand the difference between FICO and FAKO? If you’ve ever applied for credit, you’ve heard the term credit score. FICO is the industry (read: lender) recognized score but others are becoming popular too. FAKO scores are credit ratings produced by website like Credit Karma or Credit Sesame, Identity Guard,, etc. Sometimes the FAKO score will be close to your FICO score, but we have also seen them over 100 points off (higher and/or lower). It’s important to understand that the only scores that really matter in the end are FICO scores. Over 90% of lenders use FICO scores to make their lending decisions.

What is a FICO credit score?

The industry credit rating standard for lenders evaluating whether they will loan money or extend a line of credit to consumers is the FICO credit score. FICO scores are algorithms created by the Fair Isaac Corporation. Each bureau has their own branded version of a FICO score but all calculate scores based on whatever is reporting to your credit report at the moment that it is pulled and  include five categories: payment history, amounts owed, length of credit history, types of credit in use, and new credit.

Before 2003, Americans did not have the right to see their credit report or scores. Remember, the credit bureaus and Fair Isaac Corporation are private companies…  When the FACTA amendment to the Fair Credit Report was passed in 2003, it required the bureaus to provide free credit reports to consumers every 12 months ( and scores (at a cost), but the law did not specify which scores they must provide.

What is a FAKO credit score?

Any credit score calculated that is not FICO is commonly referred to as a FAKO score. A better term might be an educational score. It gives consumers a gauge for where they would be scored by FICO, but is normally not used by actual lenders. After the FACTA amendment was passed, the bureaus saw a revenue opportunity and developed their own scoring algorithms – there are many. Those scores vary a lot and can be significantly different than FICO scores. Vantage Score 3.0 (created by the 3 bureaus) has gained some momentum as a competitor to FICO (which they must pay to license). Sometimes Vantage Scores can be close to FICO but sometimes we see a difference of 100 points. Clients have come to us believing they have a 700 score, but it was a FAKO and was really a 550 FICO. It’s very confusing for consumers.

FAKO scores are used for most online consumer “credit monitoring” sites that exisit. Some are now using the FICO 8 version of scores, but that is not the version that mortgage lenders use. Virtually all mortgage lenders use the FICO Classic version of scores, created in 2004, because Fannie Mae and Freddie Mac only accept that score version. There is only one consumer site which provides the FICO Classic mortgage versions to consumers: There are only two ways for a consumer to access their true FICO mortgage score: 1) apply for credit or a loan and the lender might give you a copy; 2) pull your 3-bureau report from (however, it will cost $55 for one 3-bureau report, but that site will show you all 24 versions of your FICO scores).

So why even pay for a FAKO score? The benefit to consumers of signing up for credit monitoring (FAKO scores) are that they can follow any changes in their credit file. Monitoring sites will notify you of any changes – late payments, new collections, balance changes on credit cards. It is important to know if changes occur. The trending of scores helps you understand relative changes, however, it should not be used to determine whether you do or do not qualify for a mortgage.

The challenge for consumers is to understand that there is a the difference between their FICO vs. FAKO scores. While the FAKO score may indicate a consumer qualifies for a loan at a low interest rate, the bank will use a FICO score that may qualify the consumer at a higher rate, if they qualify at all. This is of particular concern for large purchases such as a home or vehicle. It may be worth going to to see your “lender” score before applying to a bank.

As with any financial matter, it’s important to consider the long and short term implications of your purchase. While you may only pay $25 more per mortgage payment based on your FICO score, the total over a 15 or 30 year loan is significant. It usually saves you a great deal in the long run to enter into a loan with the best credit rating you can have.

If you want to make sure you have the best FICO score possible or have questions about FICO vs. FAKO or your credit report, please make an appointment with us today! We have seen thousands of credit reports and scores, and are experts that can help you achieve your goal.

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