FICO Scoring

• What is FICO? FICO(R) model in the mid-1980s after analyzing raw data provided by Experian, Equifax and TransUnion. Which explains why the risk score it produces is generically called the FICO score -- it's short for Fair Isaac Corp. Each of those three credit bureaus then installed Fair Isaac’s model in their own operating system in order to calculate FICO scores to sell to lenders. Since the bureaus compete vigorously with one another, they each refer to the FICO scores they calculate by a different brand name: Experian/Fair Isaac Risk Model (Experian), BEACON (Equifax) and FICO Risk Score, Classic (TransUnion)

• How is my Score Calculated? Your score is calculated by a series of questions based on both your credit report & debt-to-income ratio. Each answer accumulates a certain number of points that are then added together for your final score. A typical scoring considers:

• How long you've lived at your current address
• Your job or profession
• Your financial obligations (debt-to-income ratio)
• Any late payments
• The amount of credit you have outstanding
• The amount of credit you are using
• The amount of time you've had credit established

•Most Weighted Factors: Current balances on accounts, too few bank revolving accounts, too many bank revolving accounts, number of accounts with balances, number of accounts opened in the last 12 months, length of time accounts have been established, amount of past due accounts, number of delinquent accounts, too few accounts rated "current," recent derogatory public record of collection, past due balances, number of credit inquiries made.

• What is Considered a Good Score? The magic FICO number is 620. If you score below 620 you are considered to have a very high default risk giving you the possibility of being declined. If you score between 620 & 650 you will be put into a "questionable" category where you will have to provide further documentation to get approved. A score of 650 or above is considered golden or "cream of the crop," and most likely you will be eligible for the best rate on your loan.