Your lender rattles off the term as if everyone knew exactly what FICO meant. But most of us don’t even know what the letters stand for.
The first part is simple: The Fair Isaac Corporation. Sounds mysterious, doesn’t it? What the heck is a Fair Isaac? Nothing. It just happens to be the names of the men who started the company.
In 1956, engineer Bill fair and Mathematician Earl Isaac joined forces to create what was originally a consulting and decision management service. Then in 1981 they devised a system for scoring the amount of risk associated with making certain loans and investments, and the FICO score was born.
The score is generated by statistically analyzing an individual’s credit history. Among other things, this scoring system takes into account:
· Bill paying history
· Debt to income ratio
· Debt to available credit ratio
· Length of time a person has had and used credit
· Existence of bank accounts
· Number of recent credit inquiries
Each factor in your financial makeup is given a “weight” toward your final score, which is a calculated risk factor, based on the past performance of others whose financial history is similar to yours. Through this score, lenders are shown the statistical likelihood that you will pay your debts. Then they determine under what conditions and at what rate of interest they will lend to you.
If your score is 720 or higher, you’ll have an easy time getting a loan. If your score is under 600, you’ll be considered a poor risk and if you can get a loan, it will be at a higher rate of interest.
FICO has become a giant in the American world of finance. In addition to providing credit scoring, FICO provides consulting and management services to over 200 international retailers, 99 of the top 100 U.S. banks, and over 100 international telecommunications companies.
Headquartered in Minneapolis, Minnesota, FICO has offices on 5 continents, employs over 3,500 people, and turns a revenue of over $800 Million every year. FICO is not associated with the government, but like Equifax, Experian, and TransUnion, is a publicly traded company.
You should always be aware of your credit score, so that you can make adjustments and take steps to keep it high. You can buy the report directly from FICO, or you can take advantage of a credit report offer from one of many online providers.

CreditScoreQuick.com

Q:
Hi mike,
I have a question about why I only have one credit score. I recently pulled a copy of my free credit score report through your site, and only got one score back from Equifax. I thought you got three credit scores. I don’t have any credit cards and any outstanding loans currently. I do have past history but it has been years. I decided a while back to pay cash for everything. I thought you would have credit scores from past history.

Angela Pickerall

A:
Hi Angela,
We see this quite often. There could be several situations going on here. Without actually seeing your credit report I will gives some scenarios. The first problem I see is you don’t have any new or existing credit reporting. So the current credit scoring models don’t have anything to score you on. The current FICO scoring model likes to see the following to calculate your credit scores with each bureau.

• Payment History
• Amounts owed
• Length of credit history
• New credit
• Types of credit used

All of this goes into factoring your credit score with each credit bureau. Its looks like you are lacking all of this, and this is why you don’t have 3 credit scores. Yes one might be scoring you because a creditor is reporting to that bureau only. This is the second scenario. Some creditors only have contracts with certain credit bureaus. They may not have contracts to report information with all 3.

CreditScoreQuick.com

Wrong information can be just as damaging as no information, and there’s a whole host of it surrounding the lending industry. Much of it involves credit scores.

Sadly, because many Mortgage lenders and bank representatives never take the time to actually learn about credit scoring, much of the bad information comes directly from sources you should be able to trust.

For instance, some will tell you that you should close open accounts. No! You should not. You definitely shouldn’t open any new accounts or even apply for new accounts when you’re trying to build your credit score, but if you close accounts you now have, you could actually lower your score.

This is because your debt load is measured against the credit you have available to you. When you close an account, that credit is not available, so your debt ratio goes up, making your account balances seem higher.

For instance, if you have 4 credit cards, each with a limit of $5,000, and you have balances of $3,000 and $4,500 on 2 of the cards, and zero balance on the other two, you are using only $7,500 of $20,000 available, or 37.5%. If you close the two unused accounts, you’re now using $7,500 of $10,000 – or 75% of your available credit.

The truth: If you can pay down your debt, definitely do it. But once the accounts are paid, leave them open.

You’ve also heard that inquiries on your credit lower your score. This is true if the inquiries come from specific retailers, but not if you check your own score. Mass pre-approval inquiries are also ignored when your credit is calculated. Retailer inquiries lower your score by only about 5 points, so don’t be careless, but don’t panic if there’s been an inquiry.

A good rule of thumb when you’re working on getting a Mortgage loan is to not shop for cars, furniture, appliances, etc. until your loan closes. The credit inquiries could damage your score just enough to hurt you – and even paying cash isn’t a good idea. Keep your bank balances as high as possible until there’s no chance that the lender will make a last minute check.

Next is the use of credit counseling. At one time this did affect your score, but a study conducted 3 years ago showed that people using credit counseling did not default on their debts any more than other people. The most current FICO formula ignores credit counseling all together.

BUT – credit counseling can still be risky. Sometimes counseling agencies make payments late or pay lesser amounts – and these mistakes will affect your score.

There is no doubt the Mortgage Industry has been suffering for the last 2 years. There has been a ton of banks go out of business and people all over the United States loose their jobs. With all the foreclosures and the downturn in the quality of buyers it has been extremely tough to get some home buyers financed. Luckily FHA is our current market, and allows people all over the U.S. to get financed even though their credit scores may be low.

According to, Bernard Markstein the Senior Economist for the “National Home Builders Association the “First Time Home Buyers” market will be taken off in 2009. He is claiming that the increase in homes sales for this market should increase around 700,000 units. This is great news, because the first time home buyers market drives the real estate market. When first time buyers are active this allows people who need bigger homes to upgrade. In return the new home industry starts building again. This is exactly what our economy needs, because this will create more jobs.

So the hope is the First Time Home Buyers will shrink the overwhelming market of homes for sale currently around the U.S. This will allow other families to move on with the purchase of there new homes.

Yes, getting a loan will be a little tougher but with good credit education it’s really not that hard to get a mortgage loan. During the past years it was just too easy to get a loan, but now the lending market is where it needs to be. We definitely don’t want to go through this process of banks going out of business.

My best advice if you are getting ready to make a purchase soon, is to get a copy of your free credit score report and see where you stand. Your credit score is now more important than ever. In order to get good interest rates most banks want to see at least a 620 plus fico score. Once you pull your credit and find you need some credit repair, you can repair you credit for free. Use the web; it can save you time and money.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

There is a lot of debate out there on when you should check your credit report. I am sure you have read that you can get your credit report for FREE at www.annualcreditreport.com. Yes you can, but you get it once a year for free with no credit scores. It is worth paying around $29.95 to get your credit scores along with your credit report. The reason is when lenders make there decision process your scores are part of that process. In the current credit report market you can get your free credit reports with scores on a trial period. So if you are getting ready to make a purchase or have been turned down for some reason, you should pull a recent copy of your credit report with credit scores from each credit bureau. Here is a list of triggers to pull a recent copy of your free credit reports with scores.

• Been recently denied for a credit
• Suspect someone is using your identity
• Suspect a creditor may have reported some late payments incorrectly
• Need to fix your credit report
• About to make a big purchase
• Want to know your credit scores

Even if you don’t have any of the triggers mentioned above you should pull your credit report every 3 to 4 months for good credit management. You never know if someone is messing up your good name. With the new digital age and access to personal information your social security number is floating around everywhere. Typically someone that gets your social security number is an insider at a company that has personal information on file. With the amount of foreign nationals coming to this country your social security number is a hot item on the black market. It is also a hot item with Illegal Aliens. Identity Theft recently has became officially the biggest crime waive in American History. With all of this being said staying on top of your free credit score report is a must. Once something negative has happened to your credit it could irreversible for 7 years. The only thing you can do to fix the problem is get it removed if it’s not your fault. My point being once your scores drop it takes time to regain what the mistake caused.

If you are confused on what type of credit report to get, you might consider a site that offers multiple credit report offers. When you pull your credit report you definitely want a credit report with scores from each credit bureau. Some websites offers only give you a 3-1 credit report with one score. You really need all 3 scores. Some sites offer a credit report with no scores. So my point is you need the right credit report if you are going to pay for it.

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