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FICO and Credit Scoring
Your FICO score is based on your credit history, income, outstanding debt and debt utilization over the years, access to credit, and other indicators of your financial behavior to determine how likely you are to pay your bills on time, or if at all.
Fico Credit Scoring is the standard used by virtually all lenders today.
A FICO based credit score condenses your credit history into a single number or ranking between 300 and 900.
When you apply for a credit card, a mortgage, a loan for a home or a car or other major purchase, the lender will look first at your FICO score. The higher your credit score the more likely you are to be approved for loans and receive favorable rates.
A credit score of 620 or lower is usually automatically rejected sending you to the private market, where rates are higher.
Trans Union and Equifax use different methods of computing your FICO based score. Your FICO credit score from each of these credit bureaux will be different, sometimes radically different, so you need to monitor each. Some lenders use one of these scores, while other lenders may use an average score. The FICO scoring programs at the credit bureaux are called:
- BEACON - Equifax
- EMPERICA - Trans Union
Equifax Score Power customers understand the importance of managing and maintaining their good credit.  Equifax Score Power helps you plan for and protect your future. With Equifax Score Power , you'll get
- An explanation of your credit score and tips on how you might improve it
- Instant online access to your Equifax Credit Report™ and score
- Analysis of how changes to your file - such as paying off a loan - can affect your score
- Customer Care, 7 days a week
Want to know your FICO credit score?
Equifax Equifax Score Power provides you with your FICO score, and your actual Equifax Credit Report your score is based on as well as a full explanation of your score with tips on how to improve it.
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Your fico credit bureau score is based on the following items:
Payment History
- Public record and collection items
- Severity, frequency and recent occurrence of delinquencies
Outstanding Debt
- Number of balances recently reported
- Average balance across all trade lines
- Relationship between total balances and total credit limits
Credit History
- Age of oldest loans
- Number of new loans
Pursuit of New Credit
- Number of inquiries and new account openings in the past year
- Amount of time since most recent inquiry
- Cash advances are often a sign that you are in financial trouble and can lower your score.
Types of Credit in Use
- Bankcard
- Travel and entertainment cards
- Department store cards
- Personal finance company references
- Installment loans
- Other
Your score is based on all the credit-related data in your credit bureau report, not just negative data such as missed mortgage payments or bankruptcies. Other factors may also considered by lenders. Usually though, if your score is too low, you are automatically rejected regardless of other factors.
What goes into your FICO score?
FICO Credit scores analyze a borrower's credit history over several years 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.
How can I increase my score? FICO scores consider your credit history over several years, making it difficult to increase your credit score in the short run. Over the long term you can improve your credit-worthiness by:
- Pay your bills on time and in full. Late payments and collections can have a
serious impact on your score.
- Do not apply for credit frequently. Having a large number of
inquiries on your credit report can worsen your score.
- Reduce your credit-card balances. 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.
- Reducing your total indebtness
- closing unneeded credit accounts
- avoiding bankruptcy and foreclosures.
When you're planning a big purchase like a new car, home, or a dream vacation, it's important to know what your lenders know. If your Equifax Credit Report has changed recently, your FICO® credit score may have changed, too. Equifax Score Power makes it easy for you to understand your FICO ® score. You'll see custom graphs showing how you rank nationally among other consumers and tips explaining how you might change your score over time.
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