You Credit Score- How's Your FICO?

Because we live in an automated, you're probably not surprised to hear that your creditworthiness comes down to one number. Credit reporting agencies use your payment history in order to build this score.

Equifax, TransUnion, and Experian, the three major credit reporting agencies, each have a proprietary formula for building a credit score. The original FICO model was developed by Fair Isaac and Company. Experian uses this model and calls its score FICO. Equifax's model, based on FICO, is called BEACON, while TransUnion, which also uses a slightly modified FICO, calls its score EMPIRICA. While these methods vary from one agency to another, the differences aren't huge; they all use the following factors in calculating a score:

• Your Credit History - Have you had credit for many years, or for just a short time?
• History of Payments - Have you paid more than 30 days late?
• Balances on your Credit Cards - How many accounts do you hold, and how much do you owe?
• Credit Inquiries - How many times have you had your credit checked for a loan?

These factors are assigned weights based on the formula being used. The result is a single number: your FICO score. FICO scores can be as low as 300 and as high as 800. Higher scores are better. Most people who want to get a mortgage have a score above 620.

FICO makes a big difference in your interest rate

Did you know? Credit scores are used for more than just determining whether or not you qualify for a mortgage. Lenders give lower interest rates to individuals with higher scores.

Can I improve my credit score?

Is there any way to improve your FICO score? Because the FICO score is based on your lifelong credit history, it's hard to change it quickly. (Of course you must have incorrect items removed from your credit report.)

Getting your credit score

In order to improve your FICO score, you must have the credit reports that are used to build it, and of course, you need the score itself. Fair Isaac, the company that invented the first FICO score, offers credit scores on its website: myFICO.com. For a reasonable fee, you can get your FICO from all three agencies, along with your credit report. Also available are information and online tools that can help you analyze what actions might have the greatest impact on your FICO score.

You can get a free credit report every year from the three major agencies at AnnualCreditReport.com. These reports do not include a free credit score, but it's very inexpensive to get one at the same time.

Now that you have all the facts, you will be a more informed consumer and you'll be better positioned to get the right mortgage for you.

Want to know more about your credit score? Call us: 9254610500.