What is a 'FAKO Score'

A FAKO score is a derogatory term for a credit score that is not among the FICO scores lenders access when evaluating credit and loan applicants. FAKO scores also are called equivalency scores or educational scores and provided by free online credit scoring services.

Breaking Down 'FAKO Score'

FAKO scores can differ from FICO scores in credit score ranges. A FAKO score may range 360 to 840, but a FICO score ranges 300 to 850. A FICO score is a type of credit score created by the Fair Isaac Corporation. In general, a FICO score above 650 indicates a very good credit history. A score below 620 may make it difficult for the borrower to obtain financing at favorable rates.  Most lenders use FICO scores, but some use a VantageScore, which weights items in consumer credit reports  differently but has score range of 300 to 850, like a FICO score. To determine creditworthiness, lenders also consider income, employment history and type of credit requested. Lenders typically use credit scores from Experian, Equifax or TransUnion, the three major credit reporting agencies. Each calculates a consumer credit score differently depending on the type of loan and the content of the applicant’s credit file with that agency. A different credit score may result for the same individual with the same agency depending on whether the application is for a credit card, an auto loan, a mortgage or new utility services. 

Five FICO factors

FICO scores take into account five factors to determine credit worthiness: payment history; current indebtedness; types of credit used; length of credit history and new credit accounts. In general, payment history represents 35 percent of the score, accounts owed 30 percent, length of credit history 15 percent, new credit 10 percent and credit mix 10 percent. Payment history measures whether credit accounts are paid on time. Credit reports show payments for all lines of credit and indicate if payments are received 30, 60, 90, 120 or more days late. Accounts owed refers to total amount owed. High debt does not necessarily mean a low credit score. FICO considers the ratio of money owed to the amount of credit available. And, generally the longer the credit history, the better the score. However, with favorable overall scores, an applicant with a short credit history may obtain a good score. Credit mix is the variety of accounts. To earn high scores, applicants need a mix of credit such as retail accounts, credit cards, installment loans or vehicle loans and mortgages. New credit refers to recently opened accounts. New account openings in a short period of time raise credit risk so can lower the applicant’s score.

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