FACTS ABOUT FICO: YOUR CREDIT SCORE:

A FICO is another word for “credit score”.

FICO (credit scores) are between the numbers of 300-850.

There are 3 bureaus that report credit scores: Equifax (also known as CSC), Transunion, and Experian.

Equifax is also known as your “Beacon” score

Transunion is also known as your “FICO Risk Score, Classic” score.

Experian is also known as “Experian/Fair Isaac Risk Model” score.

The differences in credit scores can be caused by the differences in the reporting of information from creditors and by the differences in recording that information by the bureaus.

The middle score is the score that lenders use and determines approval.

Most scores top off at 825.

The average score in the U.S is 692.

If your score is less than the high 700’s there is room for improvement.

90% of the banks use FICO’s.

FICO scores ignore: race, color, religion, national origin, sex, marital status, age, salary, occupation, title, employer, date employed or employment history, where you live, any interest rate being charged on an account or credit card, chil/family support obligation, rental agreements, any information not found in your credit report or any information not proven to predict any future credit performance.

WHAT DETERMINES YOUR CREDIT SCORE:

FICO scores are calculated based on 5 general categories:

Payment History = 35%
Amounts Owed = 30%
Length of Credit History = 15%
New Credit = 10%
Types of Credit Used = 10%
FICO scores take into consideration ALL these categories, NOT just one or two, when determining your score.

Rate shop for auto or mortgage loans within a short time frame, such as 14 days.  Your FICO can lower if numerous inquiries are made over a longer length of time.

If you have had bad credit in the past, re-establishing trade lines will raise your FICO in the long run.

CREDIT REPORT FACTS:

The average person’s credit history is 14 years old.  1 in 4 people have credit histories 20 years or longer.

It is a good idea to check your credit score 6-12 months before applying for a big loan.  However, if you are repairing your credit it is best to check it either quarterly or monthly to review changes.

You must have at least one account that has been open for 6 months or longer, and at least one account that has been reported to the credit reporting agency within the last six months to have a FICO.

TYPES OF SCORES:

 FICO  scores are the most common credit risk scores but there is also “application risk scores”, “customer risk scores” and “other credit scores”.

Application risk scores include the FICO but also consider information from your credit application.

Customer risk scores, also known as “behavior scores” are used by lenders along with the FICO to determine credit risk on current customers.

Other credit scores are those that evaluate your credit report differently than FICO scores.  In some cases the higher the FICO the greater the credit risk.

When purchasing a credit score, be sure to purchase a FICO score as this is the score the lenders use.

WHY CREDIT RESQ AND NOT CREDIT COUNSELING:

If you want to get a mortgage within the next 7 years, avoid turning your debts over to the Consumer Credit Counseling Services or any other debt management service.  Most lenders will not approve your loan until the CCC’s are off your credit.

FICO is NOT affected by Consumer Credit Counseling Services!  Only Lenders will discriminate.

FACTS ABOUT MANAGING YOUR CREDIT:

Pay your bills on time.

If you miss a payment, get current as soon as possible and stay current.

Paying off a collection or closing an account that you have been previously late on, will not remove it from your credit.

Closing an account does not make it go away.

If you can not pay a bill contact your creditors immediately.

Avoid Credit repair companies that advertise improving your FICO score by removing negative but accurate information from your credit report.  NO ONE can remove accurate information from a credit report.

Late payments are not an automatic score killer.  Your payment history is just one piece of information used in calculating your FICO score.

Keep balances low on credit cards and other “revolving credit”.  High outstanding debt may affect your FICO.

Pay off debt rather than transferring it to other accounts.

Don’t close unused credit cards.  Owing the same amount but having fewer open accounts may lower your FICO score.

Opening a new account may lower your FICO

This information was provided by http://www.myfico.com/