Understand Your FICO Credit Score

If you're thinking about getting any kind of a loan, debt consolidation loan, car loan, mortgage, etc., it is a good idea to know what your FICO score is.

Fair Isaac Corporation Generates Your FICO Score

FICO stands for Fair Isaac Corporation. This firm created the original scoring model in the late 1950s. Since that time, FICO scoring has become commonly accepted by lenders as a reliable method for credit rating. Based on the data from your credit report, it provides the best guide to future credit risk. The lower the risk - The higher the score. In general, the following factors are used to make up the final score and determine how creditworthy you are:

35% - Your Bill Payment History
30% - The Total Amount You Owe
15% - The Length of Your Credit History
10% - The Number of New Credit Accounts
10% - Types of Credit (Credit Cards, Retail Accounts, Installment Loans, Mortgage Loans, Car Loans, etc.)

Get your FICO Score.

Considerations include:

Current account balances including increases in balances
Late payments and the size of past-due balances
Accounts that are delinquent, defaulted or charged-off
Accounts in collection
Bankruptcy

How long credit has been established for each account
Credit available versus the total amount of credit used
Length of time you have lived at your current residence
Length of time accounts have been established
Number of revolving accounts
Number of accounts with balances
Number of accounts opened within last 12 months
Recent derogatory public records of collection
The number of recent credit inquiries (It's good to limit these.)

Using mathematical tables, points are assigned to each finding and totaled for the final score. There is no single cutoff score used by all lenders. FICO scoring is not a definitive method of determining who will be a “good” or “bad” risk. Each lender has its own overall strategy.

Click the links below to see ways you can improve your credit score.