FICO Your Credit Score FICO is an acronym for the Fair Isaac Corporation, the creators of the FICO score.

Your Credit Level Risk Lenders want to know your credit risk level  how likely is it that the lender will get paid back on time Three major credit reporting agencies  Equifax  Experian  TransUnion

Credit Report Contains: Identification – required to supply the following information every time you apply for credit.  Your name  Address (including past addresses)  Social Security Number  Birth date Important to enter info the same way EVERY time Employment – Your current job and employer. Also may include past employers

Credit Report Contains: Credit – Creditors supply monthly details such as:  Your outstanding balances  Credit limits  Monthly payments  Payment patterns over several years  Information about closed accounts remains on your report for 7 years Prospective creditors often use this section to evaluate patterns in your handling of credit, especially for the last 2-3 years

Inquiries – If you request credit from a lender, their inquiry will appear on your report for two years.  Inquiries made in order to solicit your business will appear only in your copy of the report. Negative Items – Lenders report delinquency information when you have missed a payment. Credit Report Contains :

Public record Bankruptcy Tax liens Judgments against you and, in some cases, overdue child support. Information remains on your report for 7 years, except for bankruptcy, which can remain for up to 10 years. Unresolved judgment can remain on your report for seven years or until the governing statute of limitations has expired, whichever is longer. Credit Report Contains:

Promotional inquiries A list of companies that have made promotional inquiries about you. Firms and banks that are interested in contacting you with credit offers make these inquiries because you fit a certain set of criteria. They only appear in your copy of the report. Credit Report Contains:

By law Credit Reports Do Not Contain Certain Personal Facts: Your race Religion Health status Politics

Where Do They Get Credit Information Employers Banks and finance companies Landlords Credit card companies Major stores Court records

FICO Scores Numeric value assigned to your credit habits and history using a scale of 300 to 850. Every American who has ever used credit has one. Used by all creditors.

FICO Scores One of the most important criteria for evaluating you when you apply for credit. The higher the score, the lower the interest rates you’ll pay on credit cards, mortgages, and car loans. Now also being used by employers and landlords to evaluate applications.

FICO Score Ranges Score Eligible for the lowest interest rate Below 675 considered financial risk Below 500Sub lenders category

Examples

Break Down of a FICO Score

What a FICO Score Considers Payment History (35%) How much is owed (30%) Length of Credit History (15%) New Credit (10%) Types of Credit in Use (10%)

Payment History (35%) What is your track record? Most important—have you paid your past credit accounts on time? Details on late or missed payments. Number of accounts that show no late payments. Payment information on many types of accounts. Public record and collection items.

How Much Is Owed (30%) Part of the science of scoring is determining how much is too much for a given credit profile. Your FICO score takes into account:  The amount owed on all accounts and different types of accounts.  Whether you are showing a balance on certain types of accounts.  How many accounts have balances.

How Much Is Owed (30%) How much of the total credit line is being used on credit cards and other “revolving credit” accounts. How much of installment loan accounts is still owed, compared with the original loan amounts.

Length of Credit History (15%) In general, a longer credit history will increase your FICO score. How long your credit accounts have been established. How long specific credit accounts have been established. How long it has been since you used certain accounts.

New Credit (10%) Research shows that opening several credit accounts in a short period of time does represent greater risk. Your FICO score takes in to account: How many new accounts. How long it has been since you opened a new account.

New Credit (10%) How many recent requests for credit you have made, as indicated by inquiries to the credit reporting agencies. Length of time since credit report inquiries were made by lenders. Whether you have a good recent credit history, following past payment problems.

Types of Credit in Use (10%) Is it a “healthy” mix? What kinds of credit accounts you have? How many of each?

How to Improve Your FICO Score Pay your bills on time. Keep debt balances low. Pay off debt rather than moving it around. Pay cash for purchases. Don’t open a number of new credit cards that you don’t need just to increase your available credit. Don’t open a lot of new accounts too rapidly. Have credit cards, but manage them responsibly.

Three Major Credit Bureaus You can obtain one free credit report a year from each of the three major credit bureaus by contacting/visiting: Annual Credit Report Request Service P.O. Box Atlanta, GA

The Three Major Credit Bureaus Experian P.O. Box 2002 Allen, TX Trans Union P.O. Box 1000 Chester, PA Equifax P.O. Box Atlanta, GA

The Fair Credit Reporting Act Use of your credit history is governed by The Fair Credit Reporting Act. For more information, you can call the Office of Consumer Protection at or visit their website at