What Is FICO

And How It

Affects You

FICO Is A Mathematical Model Created By The Experian

Credit Bureau As A Tool For Lenders To Use In Evaluating

The Risk Associated With Lending You Money.

Fico Stands For Fair Isaac Company, The Company That

Created The Original Scoring Model.

Fico Scores Consider Your Credit History Over Several

Years, Making It Difficult To Increase Your Credit Score In A

Short Time Frame.

Over The Long Term You Can Improve Your Credit-

worthiness By:

– Reducing Your Total Indebt Ness.

– Making Your Debt Payments On Time And In Full.

– Closing Unneeded Credit Accounts.

– Avoiding Bankruptcy And Foreclosures.

How Is Your Score Calculated?

Your Score Is Calculated By A Series Of Questions Based On

Both Your Credit Report & Debt-to-income Ratio.

Each Answer Accumulates A Certain Number Of Points

That Are Then Added Together For Your Final Score. A

Typical Scoring Considers:

– How Long You’ve Lived At Your Current Address

– Your Job Or Profession Stability.

– Your Financial Obligations (Debt-to-income Ratio)

– Any Late Payments

– The Amount Of Credit You Have Outstanding

– The Amount Of Credit You Are Using

– The Amount Of Time You’ve Had Credit Established

Most Weighted Factors:

Current Balances On Accounts, Too Few Bank Revolving

Accounts, Too Many Bank Revolving Accounts, Number Of

Accounts With Balances, Number Of Accounts Opened In

The Last 12 Months,

Length Of Time Accounts Have Been Established, Amount

Of Past Due Accounts, Number Of Delinquent Accounts,

Too Few Accounts Rated “Current,” Recent Derogatory

Public Record Of Collection, Past Due Balances, Number Of

Credit Inquiries Made.

What Is Considered A Good Score?

The Magic Fico Number Is 680. If You Score Below

680 You Are Considered To Have A Very High

Default Risk Giving You The Possibility Of Being

Declined.

If You Score Between 620 & 650 You Will Be Put

Into A “Questionable” Category Where You Will

Have To Provide Further Documentation To Get

Approved.

A Score Of 720 Or Above Is Considered Golden Or

“Cream Of The Crop,” And Most Likely You Will Be

Eligible For The Best Rate On Your Loan.

For 12 Verified Credit

Sources To Start Building

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