Fico Score | Credit Report Repair

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Fico Score

Fico Credit Scores Matter

A FICO score is a credit score that is calculated by a company called Fair Isaac Corporation. Using their own proprietary software, Fair Isaac Corp. uses the consumer financial data provided to them by each of the three major Credit Reporting Agencies (CRAs) to calculate FICO scores. One Fico score is calculated for each major CRA's data - Experian, TransUnion, and Equifax - and for this reason, every consumer typically has 3 Fico scores. Each Fico score can differ significantly from the next. Prior to February 14, 2009, consumers could purchase their three Fico scores online at myfico.com. This is no longer the case, as the Fico score calculated based on the data provided by Experian is no longer available to consumers. It is still available to lenders. Learn more about the changes to Experian based Fico credit scores and what they means to consumers.

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      It is important to note that Fico scores are different from the credit scores provided by the three CRAs. Experian, TransUnion, and Equifax each use their own software to calculate a consumer's credit score. These credit scores are
not Fico scores. A Fico score is only available from myfico.com.
     FICO scores are important to consumers, especially those interested in credit repair efforts, because they are the most widely used credit scores upon which lenders in the USA base their lending decisions. If the information contained in a consumer's credit report is incorrect or out of date, the information that Fair Isaac Corp. is using to calculate a Fico score is incorrect. The net result is that this negative credit information impacts a consumer's Fico scores and the consumer must correct the information in order to improve the fico score. The result is the consumer paying more for the credit they access, if they are able to access credit at all.

     Understand how Fico scores can impact your overall credit score. Do not underestimate the importance of your FICO scores. These credit scores directly effect what a consumer pays for the credit they access. For this reason, gaining an understanding of how Fair Isaac Corporation calculates these scores and what information they deem most important is critical for all consumers interested in credit repair and enhancing credit scores.
     FICO scores are calculated based on five general categories, including payment history, amounts owed, length of credit history, new credit, and types of credit used. It is important to note that Fair Isaac Corp. doesn't weigh all categories the same. A particular consumer's credit report contains unique information that is different from any other consumer. The details contained on any credit report impact how the information is weighted. Therefore, one particular detail will impact one person's Fico score differently than it will impact a different consumer with a different credit profile. In addition, as one's credit profile changes, so too does their Fico score.
     Credit repair is all about fixing credit reports with a goal to raise fico scores and other credit scores. Every consumer should strive to perform well in all Fico categories, however, understanding these categories can help a consumer focus on where their weaknesses lie. A consumer can then address their shortcomings in their weakest category in a strategic, concentrated manner. This not only helps a consumer understand their weaknesses, but it also helps the consumer plan and focus in a structured, well-planned manner.

FICO Score Categories - Important Details

The information below outlines the important details included in each category.

Payment History

- Payment information on accounts such as credit cards, loans, retail accounts, mortgages, and finance company accounts.

- Negative information, including collection items, liens and bankruptcies, and past due accounts.

- The degree of negative information, for example the length of time on past due accounts.

- The amounts included on past due accounts and collection items.

- How recent are delinquent and past due accounts.

- The number of past due accounts paid as agreed.

Amounts Owed

- Amounts owed on all accounts, with particular focus on some types of accounts.

- How many accounts with outstanding balances.

- The proportion of balances on credit to their prospective credit limits.

- The amounts owed on installment loans.

Length of Credit History

- The amounts of time that has elapsed since certain types of accounts were opened

- The amount of time since recent activity occurred on these accounts.

New Credit

- The number of accounts recently opened

- The type of recently opened accounts

- Number of recent credit inquiries

- The time since accounts were opened and the time since recent inquiries occurred on these accounts.

- The successful reestablishment of good credit standing after past credit problems

Types of Credit

- The types of credit accounts opened

- How credit accounts are managed

     In understanding Fico scores, consumers need to appreciate that lenders often use many tools when determining an individual's creditworthiness. Depending on the type of credit being sought, lenders will rely more heavily on some details than others. What a lender deems important when considering someone for automobile financing will differ greatly from factors they may consider vital when considering that same individual for a mortgage.

     A Fico score does not reflect other important information about a consumer, including salary, marital status, age, employment history and so on. It is against the laws and rules contained in the Fair Credit Reporting Act to
include these details when calculating credit scores. These details, however, will weigh heavily in any lender's consideration of a consumer for a mortgage.

Improve Fico Score

     Credit scores are important and your Fico score is the most important credit score you have. Accessing your Fico scores from myfico.com is the first step to understanding where you stand in the eyes of potential lenders. The second and all important step is to identify the Fico categories where your credit history is weak and to focus on changing borrowing behavior to address these weaknesses. Every positive step will result in an improvement in Fico scores. Start learning today so that you are a stronger borrower tomorrow.