If you have used a travel website lately to book a flight, you may have noticed a reliability score or rating for flights. This is expressed as a percentage of the time that the flight will actually arrive on schedule to its destination. Advanced sites will use a sophisticated algorithm that will factor in weather and airport delays, the length of delays, cancellations of flights altogether, and much more. Basically telling you that while the flights you book will get you from Point A to Point B, some airlines will be more reliable to get you there on time. The difference between a standard credit score versus a FICO^® Score can be viewed in much the same manner. While they both will help determine the credit worthiness of an individual, a FICO^® Score will provide a much more reliable view of your member's credit risk. 

First of all, when talking to members about their credit score, it's crucial they understand the basic importance of the score. A credit score tells your credit union how likely a member is to pay back a loan based on their credit history, and is calculated using information from a member's credit reports. Credit scores typically range from 300-850, the higher the score the better, as it indicates the member is lower risk to potential lenders, and will determine how willing a lender is to not only offer a loan, but compete for their business by offering lower interest rates and better terms. Conversely, a low credit score may result in higher rates, or perhaps even shut the member out from receiving loans or credit altogether.

Calculating a credit score is done by using data from a member's credit report from the 3 credit bureaus: Equifax, TransUnion and Experian. Credit scores change over time and could vary slightly based on what credit bureau the score is obtained from.  Enter the FICO^® Score.

Most lenders - 90 % of the top lenders, in fact - use FICO^® Scores as the standard for credit scores. For over a quarter of a century, FICO^® Scores (created by the Fair Isaac Corporation) are considered the gold standard for accurate and reliable scoring. They are touted for being the most fair and focused method of obtaining a trustworthy score. Members would benefit from knowing their FICO^® Score as it is a true representation of their credit worthiness, and may be the deciding factor on what car they choose, house they buy, etc. Credit unions benefit from FICO^® Score knowledge as they aren't adding additional risk to their lending decisions. It boils down to that reliability ranking: While most airlines will deliver you to your destination, not all will do so on time. While all FICO^® Scores are credit scores, not all credit scores are FICO^® Scores.

*FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.