What is a FICO score?
A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair Isaac began its pioneering work with credit scoring in the late 1950’s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrowers credit history in a single number.
Credit score analyze a borrower’s credit history considering numerous factors such as:
- Late payments.
- The amount of time credit has been established.
- The amount of credit used versus the amount of credit available.
- Length of time at present residence.
- Employment history.
- Negative credit information such as bankruptcies, charge-offs, collections, etc.
There are really three FICO scores computed by data provided by each of the three bureaus-Experian, Trans Union and Equifax.
How can you increase your score?
- Pay your bills on time. Late payments and collections can have a serious impact on your score.
- Do not apply for credit frequently. Having a large number of inquires on your credit report can worsen your score.
- Reduce your credit-card balance. If you are “maxed” out on your credit cards, this will affect your credit score negatively.
- If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.
What if there is an error on your Credit Report?
If you see an error on your report, report it to the credit bureau, all three major bureaus in the U. S. Equifax, Trans Union, and Experian all have procedures for correcting information.
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