List of Providers of Independent Credit Ratings

Your credit rating is a score assigned to you by a series of independent companies based on data contained within your credit reports. Credit ratings help lenders make financially sound decisions based on consumers' past behavior managing debt. Although the federal government regulates credit reporting practices, all companies that provide credit ratings to consumers and lenders do so as independent businesses.

The Fair Isaac Corporation

The Fair Isaac Corporation's "FICO" credit score is perhaps the most well known credit score in the U.S. Lenders depend on FICO scores more than any other when evaluating applicants' credit risk. The Fair Isaac Corporation updates its scoring formula periodically to provide lenders with the most accurate risk-assessment tool possible. The exact formula that the company uses is confidential, but consumers can visit the Fair Isaac Corporation's website at myFICO.com to view a general assessment of how the company determines individual credit scores.

Although the credit bureaus all provide lenders with access to FICO scores, each credit bureau assigns FICO scores a different name. At Equifax, a FICO score is a "BEACON" score, TransUnion identifies FICO scores as "EMPIRICA" scores and Experian simply refers to FICO scores as the Experian/Fair Isaac Risk Model.

The Credit Bureaus

The credit bureaus provide consumers and businesses alike with their own credit score, the VantageScore. Calculated differently from the Fair Isaac Corporation's FICO score, the VantageScore ranges from 501 to 990--whereas FICO scores range from 350 to 850. This discrepancy in scoring numbers, unfortunately, often leads to confusion when an individual ordering his credit score from the credit bureaus believes he possesses good credit only to be told otherwise by a lender reviewing FICO scores.

While the credit bureaus released the VantageScore in 2006 with the intention of marketing the new scoring system primarily to lenders and other businesses, as of 2010, the FICO score remains the industry standard for credit ratings.

Chexsystems

Unlike other independent credit providers, Chexsystems does not assign a numerical value to consumer accounts. Rather, its credit ratings depend solely on negative information maintained within the system. Like other forms of credit ratings, however, Chexsystems provides banks with valuable risk-assessment data necessary to limit financial losses.

When a consumer fails to pay an outstanding bank debt or bounced check, the bank will eventually report the account to Chexsystems. Information concerning the consumer and her debt then appear within Chexsystems for five years. Unbeknown to many consumers, Chexsystems is a consumer reporting agency just like the three major credit bureaus. As such, it is bound by federal credit reporting laws and consumers can dispute their Chexsystems reports in an effort to correct an erroneous negative rating.