SmartMoney:

The truth behind the numbers that can determine your financial fate.

1. "You may never know your real score."

Roughly 200 million consumers have a FICO score, which ranges from 300 to 850 and is used by most lenders to determine whether to approve them for financing and at what terms. This score is based solely on the information in consumers' credit reports. While consumers can check their generic FICO score, which weighs how well they have been managing their credit, it's unlikely they'll ever know the exact score a lender sees when they apply for credit.

More than 45 FICO scores are available to lenders, says John Ulzheimer, president of consumer education at SmartCredit.com, a credit monitoring site, and a former manager at FICO. There are FICO scores that assign more weight to certain characteristics, such as borrowers' credit card activity, or history with car loans, mortgages or installment loans (that include furniture and jewelry payment plans). Car loan lenders, for instance, often pull a FICO auto score which weighs more heavily a borrower's past car loan activity. Even if they have a stellar generic score, their auto score can be lower if they missed a car loan payment or never had a car loan, which could leave them with a higher interest rate than expected, says Barry Paperno, a credit expert at Credit.com, which tracks consumer credit issues, and a former manager at FICO.

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For its part, FICO says its generic score is the most prevalent, and that all its scores use that model as their foundation. The company created the industry scores at the request of the lenders, says Anthony Sprauve, a spokesman for myFICO.com, the consumer division of FICO.

Consumers, for their part, are often left in the dark as to what score lenders have used to come to their decision -- unless they're rejected for a loan or given a rate that's higher than what the lender advertises. One year ago, a rule that stems from the Dodd-Frank financial overhaul kicked in requiring lenders to automatically present the score they pulled on these borrowers.

2. "Lenders aren't placing full faith in us."

Large lenders are increasingly going beyond FICO scores to determine a potential borrower's creditworthiness. Indeed, credit bureau Experian (which has created scores that compete with FICO) reports that roughly 80% of large banks and lenders use their own custom scores; they incorporate applicants' credit reports from the three major bureaus -- Equifax, Experian and TransUnion (just like the FICO score). But they also take into account other factors, such as applicants' income, assets, chances of filing for bankruptcy, and the likelihood they'll generate loan revenue for the bank, says Ulzheimer.

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While large lenders have used this strategy for years, experts say the practice is becoming more widespread. The concern is that by itself FICO cannot display the full potential risk of a borrower, says Frank Donnelly, president of the Mortgage Bankers Association of Washington, D.C. But by confirming that borrowers' have enough cash reserves or assets to weather a sudden job loss, for example, lenders lower the chances that they won't repay their debts. "They're saying let's not put full trust in this -- let's back it up with other evidence," says Martha Doran, professor emeritus of accounting at San Diego State University, who studies credit scores.

FICO says it agrees with lenders' strategy. "Any lender naturally would want other information to address ability to pay and other factors in making their lending decision," says Sprauve.

Consumers could feel the impact. A high FICO score might not guarantee that they get approved for the loan, or get it at the terms they prefer, if the lender discovers an otherwise unfavorable trait that's not listed on a traditional credit report. On the flip side, consumers with mediocre FICO scores could end up in better terms with a lender than they expected if positive information is discovered through the lender's independent credit research.

3. "We're multiplying."

Consumers can now order their credit scores from more than 20 web sites, up from around five just a few years ago, at a cost of $7 to $20. But while consumers tend to think of one, uniform credit score, there are several types of scores, each of which relies on its own mix of payment history, credit applications, debt and other factors. Beyond FICO, there's the VantageScore, which was created by the three largest credit bureaus -- Equifax, Experian and TransUnion; each of those has at least one score of its own as well. But while lenders have access to different scores, FICO remains the industry standard. It's used in 90% of lending decisions, according to CEB TowerGroup, a financial services research firm.

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For consumers, the sale of other scores can lead to confusion. While many of the scores currently for sale rely on similar sets of data, there can be significant differences. VantageScore ranges from 501 to 990, while FICO scores range from 300 to 850. Others add extra information. For example, in 2010, Experian started factoring in data about on-time rental payments in some renters' credit reports, data that would impact a VantageScore from that bureau, although a VantageScore from another bureau would not take that into account. Jeff Richardson, a spokesman for VantageScore, says that more competition has led to "more accurate scoring methodologies and more attention to consumer education."

The credit bureaus say that most lenders don't rely on just one credit score. "It's a competitive marketplace and different lenders choose which credit score they prefer to use for various reasons," says Daryl Toor, a spokesman for Equifax. Separately, they say some of their scores can provide educational value to borrowers. Michael Troncale, a spokesman for Experian, says the bureau's PLUS score, which ranges from 330 to 830, "helps consumers understand their credit worthiness."

4. "Our power is greater than you may think."

When Dan Belanger tried to lease a condominium in Grand Rapids, Mich., a year ago, he provided past tax returns and bank statements to prove he could afford the place. To his surprise, his realtor told him he was rejected -- because of his poor credit score. Belanger, who owns an automated data collection firm, says he offered to pay 12 months of rent before moving in to no avail. "It didn't matter--I was pegged a risk because of my credit history," he says.

A poor credit score can threaten much more than a consumer's shot at new credit. Low scores prevent consumers from getting a mortgage and from renting in many cases. Home and car insurers often consult "credit-based insurance scores," which include the applicant or policyholder's credit score as well as other factors like their past claims and location. These scores help determine whether to approve a client and what premiums to charge. J.B. Hancock, of Chicago, says her car insurer raised her premiums 33% after her credit score dropped roughly six points to 811, and that the company didn't allow for any negotiation on the price hike.

Loretta Worters, a vice president with the Insurance Information Institute, says insurers rely on a variety of information to determine coverage and premiums. She says insurers consider only those items from credit reports that are relevant to insurance loss potential.

5. "We can wreck your career."

Credit reports, which determine borrowers' credit scores, are also the new resume, used by many employers to help determine whether to hire an applicant. Some 47% of employers report doing credit checks for some or all job candidates, according to the Society for Human Resource Management.

The assumption, experts say, is that a bad credit report might help flag poor work habits and decision-making, and even general untrustworthiness. Some research seems to back employers' fears: Nearly one third of employees with self-reported credit problems engaged in "counterproductive work behavior," such as theft or accepting bribes, compared to about 18% of employees without financial problems, according to a 2008 academic study.

Consumer advocates argue that the credit check serves as one more setback for the unemployed. To earn extra income while in retirement, Penny Fox, 68, applied for an insurance sales position at a large health insurer one month ago. Fox, who's based in Phoenix, Ariz., has more than 30 years experience in the field, but was rejected for the position after the employer discovered her poor credit. Fox recently lost a home to foreclosure and fell behind on credit card payments. "It's like a house of cards -- I'm caught in it," she says.

The tide could be shifting. At least seven states prohibit companies from doing credit checks on many applicants, and similar bills are pending in another 20 states and Washington D.C. Separately, the latest SHRM report released this month shows that fewer employers are conducting credit checks than two years ago and 80% of employers who did said they hired a job candidate with negative information on their credit report.

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