Fair Isaac Corporation Credit Or FICO Score
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Article Title: Fair Isaac Corporation Credit Or FICO Score
Author: Roy Thomsitt
Word Count: 730
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As I am not from the US, I had no idea what FICO meant before
researching it. FICO stands for Fair Isaac Corporation, a
company based in California. FICO, put simply, is a person's
credit score. A credit score can be used by a potential lender
in making a judgement on whether to grant you credit or not,
for example when you apply for a new credit card or home
mortgage. Therefore, if you are in the US, the FICO score is
very important to you. What Does a FICO Score Do?
A FICO score places a value on the types of credit accounts you
hold or have held, and your credit history in maintaining those
accounts. The FICO score scale ranges from 300 to 850, with the
majority of people in the United States in the 600 - 850 range.
Factors Which Affect Your FICO Credit Score
There are 5 factors in all which determine your FICO credit
1. Your payment history.
This counts for a very significant 35%--the most of the FICO
score factors. As you would expect, paying your bills on time
is gets you a good score, while paying them late on a
consistent basis is will mark down your FICO score. If you have
had debts referred to a collection agency, that is worse still,
while declaring bankruptcy is the worst of all.
2. How much you owe.
Another obvious factor that FICO will take into account in
arriving at a credit score. This accounts for another 30% of
your total FICO score. It is not just what you owe already that
affects your FICO score. Also taken into account is the amount
of credit available to you. For example, if you have a credit
line of $5000, but have so far only used $1000, that will be
taken into account.
Your total amount of credit will be totalled, and compared to
your annual income. So, loans such as car loans, mortgages,
credit cards, store cards, will all be added together. Those
who use most or all of their available credit will get a lower
rating for this part of the FICO score calculation.
3. Length of credit history.
Another important factor that makes up 15% of your FICO credit
score is the length of your credit history. The longer your
credit history, the better for your FICO score. Additionally,
though, a long history with any particular lender will be good
for your credit score.
4. Type of credit mix.
The fourth factor taken into consideration is the type of
credit mix that you have. For example, do you have only high
risk unsecured type credit, or do you also have some solid
secured loans such as a home mortgags? Those consumers who have
a mix of credit have higher a FICO score. This fourth factor
just counts for 10% of the total FICO score.
5. Number of new credit applications.
The last factor in the FICO rating is the amount of new
applications that you fill out. If you have recently filled out
a lot of credit applications, this will hurt your score because
it puts lenders �on alert� that something may be wrong. This
part of the score is worth 10%.
Lenders themselves will normally look at employment, income,
length at current residence, and marital status, but these do
not affect your FICO score. If you intend to borrow in the
future, you do need to pay attention to your FICO score. If
your FICO score is low, this could lead to higher interest
rates, extra mortgage insurance when buying a home, and in some
cases denial of the loan.
If you plan to take out a major loan, such as a home mortgage,
it could be a wise move to get a copy of your credit report 6
months before you plan to apply. That will give you time to
look over your history, to ensure there are no discrepancies.
If you find inaccuracies, contact the Credit Reporting Agency
in writing. They will have 30 days to investigate it, and then
correct it if they find your claims are true. You may also want
to ask for a revised credit report; they are required by law to
supply you with one if an inaccuracy is found and corrected.
About The Author: Roy Thomsitt is the owner and part author of
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