Fico Scores   (top)

A FICO® score is a most widely used credit score by creditors and lenders today. It is useful in directing applications to specific loan programs and to set levels of underwriting, i.e. streamline, traditional or second review. The FICO score is widely used because it are objective, consistent, accurate and fast. Your 3 digit FICO score will determine what interest rate you will pay on your credit cards, mortgages, and auto loans.

FICO scores were developed by Fair Isaac and Company, Inc. for each of the credit repositories. The scores are: (Equifax) Beacon, (Experian, formerly TRW) Experian/FICO and (TransUnion) Empirica. They are simply repository scores meaning they only consider the information contained in a person's credit file; they do not consider a persons income, savings or amount of a down payment for a mortgage.

Your score may be different at each of the three main credit reporting agencies. The FICO score from each credit reporting agency considers only the data in your credit report at that agency. If your current scores from the three credit reporting agencies are different, it's probably because the information those agencies have on you differs.

But no score says whether a specific individual will be a "good" or "bad" customer. While many lenders use FICO scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product. There is no single "cutoff score" used by all lenders.

A FICO score is based on the information in your credit report located at that particular credit bureau. The actual scoring process is proprietary, and the algorithms are copyrighted. A score is determined by summarizing a number of factors in your credit report.

Information about the way you paid your credit accounts in the past, including late payments and bankruptcies.

FICO considers whether you have accounts in collection; whether you have any delinquencies,and how frequent and recent they are; and whether you make your payments on time. How much impact each item has on your score depends on what other information is in the report. For instance,one late payment may not affect your score significantly if the rest of your history is good,because the model looks at credit patterns,not isolated credit mistakes. In addition,FICO gives you points for maintaining a good payment relationship.

The amount of credit you are using, and the amount of credit still available.

FICO considers the number of balances recently reported, the average balance across all trade lines, and the relationship between the total balance and total credit limit. FICO considers your current level of borrowing and whether you are close to or over your limit. Carrying too much credit is held against you even if you do not have balances on those cards.

The number of months your credit accounts have been on your credit report.