What is the difference between FICO and Risk Score?

Stare At Me: What is the difference between FICO and Risk Score?
I have two credit card accounts that provides free scores each month…. one uses FICO and other uses something called “Transunion Risk Score” which is 40 pts LOWER than my FICO. The FICO is also provided by Transunion.

So which is more accurate and likely to be seen by the lenders?

It also lists this as one of the reasons why my score is lower:

Too few recently opened bank installment accounts (Reason 41)

Is this referring to car loans?

Answers and Views:

Answer by bcyouletme
Bank installment accounts would be a car loan, a mortgage…anything with a monthly payment due on a balance. NOT credit cards basically or anything revolving. Lenders tend to look at FICO. I have no idea what risk score is. You might want to call your credit card company on that.

Answer by MBATXguy
Okay… I see a couple of misconceptions about the risk score versus FICO score…

Risk score – statistical model (all vary) between credit bureaus to try to come up with a grading profile based on population sampling.. Putting it simply — they try to grade your spending habits/debt/activity against the rest of the country (in a quantitative figure).. I cannot measure your Sears account, etc.. They utilize different %’s to grade each category – inquiries, revolving debt, installment accounts, etc….

FICO – Score based on statistical model from Fair Isaac Corporation. Funny thing.. this scoring model was created by Equifax. It is widely used today in completing of many higher $ $ transactions (i.e. mortgage). A FICO score looks at what is on your credit report, but is different because the scoring model is applied the same over all three credit bureaus….

Now, anytime you take on new debt, your score will dip temporarily. They have to penalize you for obtaining new debt because their studies show that new debt means more risk of not being paid.. more bills means less free cash. Yes, this can refer to a car loan if you recently got one. Give it 6 – 12 months and this will improve.

Finally, a FICO score is provided by Fair Isaac Corporation (not Transunion). Transunion probably sold the score to you, but it was Fair Isaac Corp’s statistical model looking at your activity on your Transunion report.

Hope that helps.. e-mail if any questions..