Your FICO Score
I know you've heard the term before, but, what exactly does it mean? And, how is it figured?
FICO is short for Fair Isaac Corporation and is the best known of several companies that provide software for calculating a person's credit score.
FICO measures credit-worthiness. Underwriters use three credit bureaus, Equifax, Experian, and Trans Union, to determine your score in the following ways:
1. Delinquencies lower scores, and scores drop when several credit accounts are opened in a short period.
2. A long credit history is better than a new one, and too few revolving accounts makes it harder to evaluate the ability to manage credit.
3. Consumers with “maxed out” cards may have trouble making payments. Too many revolving accounts indicate over-extension.
4. Tax liens, bankruptcies, and use of consumer credit agencies can all lower a FICO score.
5. Small credit card balances and no late payments show responsibility.