Happy Mothers Day to all Moms!

Those “free credit score” jingles are like nails on a chalkboard to me. See—they are almost all scams.

Here’s how they work:

First, what they really offer is a free credit report. Then they try to sell you your credit score.

And here’s the problem: the credit score they try to sell you is total junk.

It’s called a “Consumer score,” and it’s not the same score that a lender, credit card company, employer, or landlord would see when they pulled your credit score.

Almost all lenders and banks use something called a FICO score. In fact, in my 20+ years in the real estate, mortgage, and credit industries, I have never once known a lender to use anything other than a FICO score.

Here’s the part that is even worse: FICO scores are almost always lower than Consumer scores. I tested this a few years ago on my own credit score. My FICO score was a whopping 237 points lower than my consumer score. I asked some friends to test it as well: Michael’s FICO score was 79 points lower than his consumer score, and Jocelyn’s was 54 points lower.

In all three circumstances, the Consumer score was higher.

Yesterday, I decided to see if things had changed. This time, my FICO score was 70 points lower than my Consumer score.

So the gap was a little narrower, but still wide enough to cause a big problem.

You see, if I relied on my Consumer score, I would have an artificial sense of security because it is always higher than my FICO score.

This can cause a big problem. Prospective homeowners do a little research, realize that lenders provide the best interest rates to people with FICO scores of at least 720, then they buy their credit scores from a free credit report website.

They don’t realize that the credit score they are buying is not a FICO score. And when their Consumer credit score comes in at 745 or 815, they think they are out of the woods. Instead of taking the steps necessary to build their credit scores, they sit back and relax.

But when it comes time to buy a house, their loan applications are either denied due to low credit, or they end up paying more interest than they expected. In Jocelyn and Michael’s case, the difference in interest on a $300,000, 30-year, fixed-rate home loan would have been about $12,000.

And this is a problem for everyone, not just prospective homeowners. What about the folks who carry credit cards and finance their cars? These people buy their Consumer scores, and then wonder why they are not qualifying for better interest rates. My credit score is high, they think. I guess these are the best available interest rates.

Little do they know that they should take a few simple steps to rebuild their real credit score—their FICO score.

So what should you do about the free credit report scam? Get an accurate representation of your credit score by buying it directly from www.720FicoScore.com.

Philip Tirone

P.S. The only place you can buy a FICO score online is from www.720FicoScore.com. Every single other website out there will have fine print explaining that the score you buy is not the same score lenders will see.

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