Ever wonder what a FICO score stands for? Obviously, this is a credit score, but who determines what that score will be, and what does FICO mean? By learning more about the Fair Isaac Corporation, some of these questions can be answered.

In 1956, and engineer by the name of Bill Fair and a mathematician known as Earl Isaac founded the Fair Isaac Corp., or FICO. FICO originally provided consulting and decision management services, but in 1981 they developed a system for scoring the amount of risk associated with making certain loans and investments. The FICO score is a number generated from an individual’s credit history. By statistically analyzing this report, the FICO system assigns a value to the likelihood that an individual will pay their debts. This value is noted by banks and other lending institutions when determining the interest rates and other characteristics of a loan, helping them to make accurate and profitable lending decisions.

So is FICO a credit bureau? The answer is yes and no. It seems we have all heard of the credit bureaus that gather information about our debts and assign us credit scores. In actuality, they are not credit bureaus at all. FICO and the other similar companies are not associated with the government but are in fact publicly traded companies known as credit reporting agencies. Out of these companies such as Equifax, Experian, and TransUnion, FICO is the most known and widely used credit-scoring agency in the United States.

The Fair Isaac Corporation is headquartered in Minneapolis, Minnesota but has offices throughout five of the 7 major continents and turns a revenue of over $800 million dollar per year. Beyond producing credit scores, their over 3,500 employees provide consulting and management services to more than 200 international retailers, 99 of the top 100 US banks, and over 100 international telecommunications companies. FICO has become a cornerstone for the entire American economy.

Getting your fico score is easy. You can buy your score directly from FICO or you can receive a free credit score report from various online providers. Once you know your score, you can quickly assess what kinds of lending options might be available. A score of 720 or higher is considered worthy credit, or good credit, while anything that drops below a 600 is considered bad credit. With bad credit you will pay more in interest on loans and have more difficult qualifying for certain loan packages. There are many things you can do to improve your score, but the best one is to simply pay you debts.

Author: Mike Clover

After taking the first step of obtaining a free credit score report, the next most common step to improving your credit score is to correct any errors that might be present. Strangely enough, errors do occur, and it is well worth taking the time to dispel such inconsistencies. You must carefully scrutinize the report in order to correct things like account numbers, names, wrong information, as well as items that are out of date. The last error type is the most common mistake and when corrected can have an important impact on your score.

There are guidelines that regulate how long certain kind of information can be recorded in your credit score. For example, most undesirable information that is over seven years old may be removed. This includes lawsuits, judgments, paid tax liens, accounts dispatched for collection, records of criminal activity (other than convictions), late payments, and even child support and many other pieces of possibly adverse information. This is great news for those that have blemishes on their credit report from years ago. These things will not show up forever. Even insolvencies that are older than ten years can be dismissed from your score. Getting rid of this outdated undesirable information can have an immediate impact on your score, especially depending on the severity of the problem.

It may seem silly, but it is just as important to check things like your Social Security number, name, address, phone number, and information concerning your occupation. These mistakes might be outdated or simply entered incorrectly. These errors actually do occur. In the same way, errors also occur concerning your involvement with certain accounts. It is possible that suits or credit accounts that do not belong to you show up on your credit report. This is also true of accounts that have been paid in full. Sometimes these accounts may not have been updated and still show an outstanding balance.

By filling out a request for reinvestigation form or writing a letter, you can correct these errors that are detrimental to your overall credit score. You should, as carefully as possible, reference every inaccurate or outdated piece of data that appears on your report as well as describe why that information is incorrect. The reporting agency will then investigate those items and contact you within 30 days to notify you of any changes. This process may also be expedited if you are trying to qualify for a mortgage or car loan. This is known as a rapid rescore.

Once you have rid your free credit score report of any incorrect information, you can then begin to add positive information. This might be through a new loan, a secured credit card or simply making responsible payments on the accounts you already have. By double-checking your credit report for errors you might save yourself a great deal of time in the task of recreating your credit merit.

Author: Mike Clover

The paradox of improving or creating a credit score with the use of lines of credit may seem impossible. How are you going to prove your credit responsibility if no one will issue you a line of credit for doing just that? For people who find themselves in this situation, secured credit cards can be the answer. By using a secured credit card, an individual can demonstrate their ability to pay bills on time and use a card card responsibly.

Secured credit cards are issued when an applicant who has bad credit can offer some type of deposit or collateral for that amount of credit. This might be a deposit of a pre-arranged sum of money into a savings account, certificate of deposit, or money market. This way, the lender is covered if the applicant is not able to make payments, reducing the risk dramatically. This benefits the card holder by allowing them to create a credit history. Instead of spending cash, they can make purchases on the credit card and make responsible monthly payments to contribute to their overall credit score.

When using a secured line of credit, it is important for the cardholder to pay off the card in full every month. Just like any other card, interest will be charged on the outstanding balance of a secured credit card. The idea is to improve your credit score, not to acquire more debt. If an individual defaults on secured credit, the lender can then withdraw the defaulted amount from the security account to pay the debt. Though the debt will be paid, it may result in more damage to your credit rating. Be sure to discuss this with a potential secured credit lender to determine their policy on reporting to credit agencies.

When considering various lenders for a secured credit card, take the time to read the fine print and ask questions. Make sure you understand the interest rate that will be charged. You can expect for the rate on a secured card to be somewhat higher, but it should still be reasonable. Take every factor into account when making your decision. What are the grace periods, penalties for late payments, and any other fees that might be associated with the account.

Once you have obtained a secure credit card, diligently make payments on time and for the right amounts. After six months to a year of responsible credit use, many lenders will increase your limit, possibly even doubling it, which is great for your credit score. Continue to pay off the balance each month and your credit report will reflect the fact that you have more available credit that you are handling responsible.

Secured credit cards are a great way for people to get back on the right track. If you are serious about improving your credit or establishing a history, explore the possibility of a secured credit card. It is a great step toward teaching you to manage money more responsibly and showing lenders that you can.

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There is so much information out there on improving your credit score that it is hard to know what really works. Because most people never take a class or fully understand the credit system, a host of myths and misinformation has developed regarding the subject. Some of these misnomers may seem logical or possible, but really have no grounds for proof. Sadly, much of this information is coming directly from sources that should know what they are talking about, such as bank representatives or mortgage lenders. For this reason, it is important to be aware of the basic credit score myths to keep from wasting your time or even hurting your credit score.
Perhaps the most common piece of bad information that people receive concerns their current accounts. If a broker or other individual claims that closing accounts will improve a credit score, they are completely flawed in their logic. Yes, having too many open accounts will reflect negatively on a credit score, but closing existing accounts is another matter. Once the accounts have been opened, the damage is done, and it is best to keep them open. Shutting accounts can actually hurt your credit score. The amount of credit available to an individual is one factor affecting credit scores. When accounts are closed, the amount of available credit shrinks, making account balances seem larger by comparison. Paying down debt is an excellent idea, but in the process, leave opened accounts open.
Many people believe that checking your FICO score can actually hurt your credit. This is another common confusion due to the fact that certain inquiries can hurt your credit while others do not. Applying for new credit will often hurt your score, but ordering a copy of your credit report will not. Mass pre-approval inquiries also go unpunished. When a credit score reduction is caused by an inquiry of some kind, it will only change the score by 5 points or less, so even in this event, this is not a huge factor in your score.
Your ability to qualify for certain loans may be impacted by the use of credit counseling, however, many people think that credit counseling will scar your credit score in the same way as bankruptcy. This is simply not the case. The most current FICO formula actually ignores credit counseling all together. This was a change that occurred due to a research study conducted three years ago that supports the fact that people using credit counseling did not default on their debts any more than other people. However, take note that using credit counseling might impact your ability to qualify for certain loans. Sometimes, counseling agencies make late payments to your creditors or settle for lesser amounts, and these things will show up on your score, but the use of credit counseling in general will not negatively change your credit score.
These myths are some of the most widely accepted misnomers about the credit industry. Understanding their falsehood will help you to manage your credit more knowledgably or seek the right kind of help to repair your credit. If a broker, counselor, lender, or agent tries to feed you one of these myths, you might seriously consider how knowledgeable they really are about everything else involving your credit.

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, Internet identity theft software, secure credit cards, 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.