Interview: Evan Hendricks
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Consumers have three FICO scores based on the credit reports from the big three credit bureaus, but two of the big three credit reporting agencies sell credit scores directly to consumers that are not FICO scores at all. Do you think people realize what they're getting when they purchase these scores?

Credit scores & credit reports 1. Why check your score? 2. Are you getting a FICO score? 3. Preapproved offers & scores 4. The problem of mixed files 5. When to call an attorney 6. Student loans & credit reports 7. Are credit scores colorblind? 8. Credit scores & insurance rates 9. Consumer protections

Unfortunately, no, I don't. I've just seen many examples where a consumer's trying to be an educated consumer and get an idea of what their score is and what's offered to them from Experian and TransUnion are the knockoff scores, or FAKO scores. Those will differ even more greatly than what the creditor will judge them on, in most cases. Partly because the other scores such as the TransUnion TrueCredit score operate on a different scoring scale. I think TrueCredit goes to either 900 or 950 -- whereas the FICO stops at 850. So the TransUnion score will give the impression oftentimes that your score is better than it is.

To my knowledge, lenders don't use any of these scores that are sold directly to consumers by Experian or TransUnion. That's why they're called educational scores. But sometimes the education is very bad.

Preapproved offers & scores
Some people might think there's no need to check their score because the preapproved credit card offers they're getting in the mail offer great rates. Would you discuss why the rates and other come-ons mentioned in "preapproved" offers may not mean that the consumer has a high credit score?

The name of the game in credit cards is to acquire as many customers as you can and then drive them up to as high an interest rate as you think that they will pay. It's called "rate maximization." The name of the game is rate maximization, because the higher the interest rate that card customers pay, the more the credit card company makes. And so, there's a lot of ingenuity used in marketing to customers that might be in precarious credit situations with large credit card balances. That's where the whole balance-transfer approach came from. There's a certain part of the market or the industry that likes catering to people with middle, lower and really-low scores because they see there might be greater profit margins there. That's what drove the whole subprime credit business for the last several years, which now has the chickens coming home to roost.

But the basis of the philosophy is: These are consumers that either have trouble saying no to credit, or when they get credit, they have trouble managing it responsibly, but if we give credit to them and they pay the way they're supposed to at our rates, we're going to do very nicely. In some sense, it's kind of like a suckers list. There are car dealers and others that will get lists of consumers who just went through bankruptcy, and they start marketing to them. It comes it all shapes and sizes.

So, you can't be sure you have a good credit score based on the preapproved credit card offers you receive.