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Home | Recent Newsletters | Beware the FAKO Score When Finding the Right H . . .

Beware the "FAKO" Score When Finding the Right Horse Business Loan

Pam Saul and Elisabeth McMillan

One of the considerations to think about when going for a loan is the status of your credit rating. A little known fact is that there is more than one credit-scoring formula. The most widely known score is "FICO," which belongs to Fair Isaac Corporation.  The score is the number that is formulated based on your credit history and used by lenders to evaluate your credit risk. This system has a scale that has a top rate of 850 as a value.   Most lenders use this rating system to assess the financial steadiness of the client seeking the loan. Fako Score

What most people don't realize is there are rival credit scoring companies out there that have created a system that uses a different rating (their top rate is 990), which gives the appearance of a better score; hence the "FAKO" name.  And worse yet, they are calling it a consumer education score. Unsuspecting individuals are purchasing this score as a way to review the status of their current credit rating. Unfortunately, it's not the true picture. 

When the credit rating bureaus (Equifax, Experian, and TransUnion) sell their scores to lenders, they tend to get manipulated for that industry. So your auto loan score can be different from your credit card score can be different from your mortgage score, etc. 

There is some help out there for consumers. The Dodd-Frank Act requires lenders to notify any client that does not receive the best rates available because of information in the credit report. They must provide the credit score being used to judge the applicant, the range of the rating system used and the key factors that adversely affected the credit score in that rating. 

This law should help consumers become better informed about the information that is being used in evaluating their credit worthiness for financing.  You can also purchase your FICO score for $19.95 by going to

The Right Type of Loan

One thing that we've talked about before is leveraging the right type of loan.

For example:  When trying to secure a loan to expand their business, if a horse trainer owns their property,  they may find that rather than a business loan it is far easier for them to secure a line of credit or a second mortgage.
Or if a horse professional is attempting to purchase their own place, they may find that it is easier to qualify for a standard homeowners loan rather than a commercial loan.
The key is to discover the loan qualifications prior to applying so that you apply for the best loan (the one you have the best chance of receiving) rather than wasting your time or risking “dings” to your credit score by being turned down.
In other words, sometimes the “right” loan has the “wrong” name.  So look for loans that meet your needs and qualifications not the other way around.


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