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Understanding Fico Scores

Fico scores are the most important criteria for a lender or creditor to
extend you a loan or a line of credit.

The mathematical model to calculate the three digit FICO Score is proprietary, and not made public. We do know that the following factors affect your fico scores:

  • Outstanding Accounts : The more the debt you have also known as high income debt ratio, the higher the risk you are and this lowers you Fico score.
  • Derogatory Information : The most recent two years of credit history are weighted higher than past history.
  • Credit History : The longer the credit history or account is established the better. Your employment on your report also is a plus, the longer you have been working at an employer the better. Beware of open credit, open credit are those accounts that are open with no debt and have not been used for over one year. This may count against you when applying for any credit. The lender or creditor may say that you can theoretically max out these accounts and higher you income to debt ratio.
  • Use Of Credit : The fewer the credit accounts open the better. Additionally, the less credit inquiries the better the Fico scores. If there are many credit inquiries or credit check the lender may think you are trying to open numerous accounts.

Typical Fico Score grades:

  • 750 and above Excellent A++
  • 680 to 750 Very Good A+
  • 620 to 680 Good A
  • 580 to 680 Above Satisfactory B
  • 550 to 580 Satisfactory B-
  • 480 to 550 Below Satisfactory C

Get a copy of your credit report (click here)

Credit Reporting Agencies

Experian Credit Information Service
PO Box 2002
Allen, TX 75013-2002

Equifax Credit Information Services
PO Box 740241
Atlanta, GA 30374-0241

TransUnion LLC
PO Box 1000
Chester, PA 19022-1000

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