Secrets to Understanding Your F.I.C.O. Score

April 25, 2012 by  Filed under: Credit 

The process and scoring of the F.I.C.O. is indeed a closely held secret between Fair Isaac and the three major bureaus and the banks. And even then the scoring may differ from a margin of 10% plus/minus either direction.The branding of F.I.C.O. can vary with such names as Pinnacle, Precision, Empirical and Beacon, which many of you may a heard of the last brand mentioned. So that back ground information helps you to understand the difference in scoring that seem to vary from agency to agency.

The scoring tops out at 850 with F.I.C.O. and 950 with Beacon. With F.I.C.O. being the most prominently used throughout North America.35% of the scoring for F.I.C.O. is still a closely held secret in the banking world. But the remaining 65% will be shared with you openly in this article. 1. Payment History = 2. Total debt / total available credit = 30% 3. Length of positive credit history = 15% 4. Mixture of type of credit = 10% 5. New credit applications = 10%

Payment history, meaning the longevity of the account and how many late pays if any, 30 day, 60 day, 90 day etc. Total debt versus total available credit meaning how much of your available credit are you utilizing. Length of positive credit history can vary to as little as nine months to a standard of 12 to 48 months. Mixture of credit could be a couple of major credit cards, department store cards, gas cards, car loan and a mortgage as examples. In essence you should strive to have 3 active trade lines to be viewed favorably by lenders.

So how do we take this information and use it to our advantage in position ourselves to receiving favorable credit terms from future lenders? Firstly the obvious, pay your bills on time. Secondly, on all revolving charge accounts, keep the standing balance below 25% of the available credit limit. Thirdly, as mentioned above diversify your lines of credit between having major credit cards,department store card,gas cards etc. Fourthly, if your going to apply for credit, strive to do it all at once, versus every month. And lastly keep your oldest lines of credit open. Clearly that shows the potential lender that you have the ability to pay over and extended period of time.

If you apply this information to your lifestyle wisely and responsibly you can easily position yourself for a future of favorable rates.

Good luck in your journey!

Patrick Ratchford,” Renaissance Trader” –

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