Fico score wiki
Fico score wiki
Your Greatest Asset
What are FICO credit scores
Your credit score is often referred to as your “FICO” score, but it is actually calculated by whichever credit bureau you request your report from—Equifax, TransUnion, or Experian. The Fair Isaac Corporation (FICO) is simply the company that designed the software used by these three credit bureaus.
Importance of FICO scores
- People with high credit scores—qualify for the lowest interest rates on mortgages, auto loans, and high-end credit cards.
- People with very poor credit—have very few financing options or pay very high interest rates.
FICO score calculation
- Note: A “weight” is a percentage out of 100 that reflects the importance of one factor in the calculation. For example, a factor with a weight of 65% is more important than a factor with a weight of 10%. The total of all weights must equal 100%.
Credit score factors
Payment history (35%)
- This is the most important factor in your credit rating
- How often you make on-time payments on credit cards or loans.
- If you miss payments or make late payments, it can hurt your FICO score
Amount owed (30%)
- Total amount you owe across all accounts
- Percentage of available credit being used
- Types of accounts with balances
- Number of open accounts with balances
- How much is still owed on loans compared with the original loan amount
Length of credit history (15%)
- The longer you have had open credit accounts, the longer you have been “creditworthy”
- Keeping cards open and using them regularly without getting into debt helps keep your FICO score high
Credit mix (10%)