FICO - Your Credit Score

Since we live in an automated, it's probably not that surprising that your creditworthiness boils down to a single number. The years of paying your various bills: your mortgage, vehicle payments, and credit card bills are analyzed, sliced, spindled and mutilated into a single indicator of whether you're likely to meet your future obligations.

Each of the three credit agencies has its own formula for building your credit score. Fair Isaac and Cooriginally developed this score. . 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, each agency uses the following to calculate your credit score:

• Credit History - How many years have you had credit?
• History of Payments - Have you paid more than 30 days late, and how often?
• Balances on your Credit Cards - How many accounts do you have? How much do you owe?
• Inquiries on Your Credit - How many times have lenders pulled your credit for the purpose of giving you a loan?

These factors are weighted differently depending on the formula being used. The result is one number. Credit scores range from 300 to 800. Higher scores are better. Most home buyers likely find their FICO scores between 620 and 800.

Not just for qualifying

Did you know? FICO scores affect more than your ability to get a loan. They also affect your interest rate. Lenders give lower interest rates to individuals with higher scores.

Raising your credit score

Unfortunately, there isn't a lot you can do to immediately improve your credit score. Since the FICO score is based on a lifetime of credit history, it's difficult to change it quickly. You should remove any incorrect reporting from your credit report, which is the only "quick fix" for credit problems.

How do I find out my FICO score?

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

You can get a free credit report once a year from all three agencies at AnnualCreditReport.com. You won't get a free credit score from AnnualCreditReport.com, but getting it is fast and very inexpensive.

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.

Curious about credit scores? Call us: (808) 935-0678.