You Credit Score- How's Your FICO?

Since our society is so computer-driven, it should come as no surprise that your creditworthiness comes down to a single number. The FICO score is compiled by credit reporting agencies. They use the payment history from your various loans: mortgages, car/motorcycle loans, credit cards, and the like.

Equifax, TransUnion, and Experian, the three major credit agencies, each have a proprietary 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 each of the models considers a range of data available in your credit report, all of the agencies use the following to build your credit score:

• Your Credit History - Have you had credit for many years, or for just a short time?
• History of Payments - Do you pay your bills on time?
• Your Credit Card Balances - How many accounts? How much do you owe?
• Inquiries on Your Credit - How many times have you had your credit checked for a loan?

These factors are assigned weights based on the formula being used. Each formula produces a single number which varies slightly by agency. Credit scores range from 300 to 800. Higher is always better. Most borrowers getting a mortgage loan in the current environment have a score above 620.

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.

Can I raise my credit score?

Unfortunately, there isn't a lot you can do to immediately improve your credit score. Because the score is entirely based on a lifetime of credit history, it's hard to significantly improve the score with quick fixes. (Of course you can and should remove incorrect data on your credit report.)

Know your FICO score

Before you can improve your score, you have to obtain your score and ensure that the reports from each agency are correct. Fair Isaac, the corporation that offered the original FICO credit score, sells FICO scores on myFICO.com. It's inexpensive, fast, and easy to get your credit score as well as reports from all three reporting agencies. Also available are information and online tools that can help you improve your credit score.

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

Armed with this information, 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? Give us a call: 8005930143.