WHAT EXACTLY IS FICO?

We all here it on television for credit card advertisements, see subscriptions come to us daily about signing up for a FICO Credit Reporting. What exactly is FICO.

FICO is a credit score developed by a company called FICO short for Fair Isaac Co.

They specialize in what's known as "predictive analytics," meaning they take information and analyze it to predict what's likely going to happen.

Are FICO Scores the only risk scores?

No. There are credit score systems that lenders may use to evaluate your credit risk. The most common used in the U.S are FICO Scores.

Some other credit scoring systems include customer risk scores, application risk scores, and other credit scores.

A FICO Score alone will not determine whether you get credit. Lenders will look at the amount of debt you can reasonably handle with your given income, employment history, and your credit history.

How many FICO Scores do you have?

You actually have three FICO Scores so when someone says "your score" they're talking about your current FICO Scores developed by FICO- one at each of the three main US credit reporting agencies (Experian, Equifax, and TransUnion).

FICO developed all three FICO Scores using the same method and rigorous testing and each credit reporting agency considers only the data in your credit report at that agency.

Since lenders may review your score and credit report from any of three credit reporting agencies, it's a good idea to make sure all your information is accurate because some agencies might have different information about you so your scores will differ per agency.

What are the 5 most important things

my FICO Score considers?

1. Payment history (35%)

2. Amounts owed (30%)
3. Age of accounts (15%)
4. Inquiries (10%)
5. Types of accounts (10%)

A FICO Score considers all these categories of information, not just one or two. The importance of any factor depends on the overall information in your credit report.

Remember that as the information in your credit report changes so does the importance of any factor in determining your FICO score.

Your FICO Score looks only at credit information in your credit report.

Your FICO Score considers both positive and negative information in your credit report.

Will checking my FICO Score make it drop?

No checking your FICO Score does not count as an inquiry nor when you order your credit report or credit score from a credit reporting agency. When you check it yourself, this is considered a soft pull.

How much do inquiries affect my FICO Score?

Inquiries actually have a very small impact on your overall score, but it does differ depending on your credit history.

If you have few accounts or a short credit history, inquiries will affect it greater then, say if you had a good history where an inquiry will take less then five points off the overall FICO Score.

Also, if you are looking for a mortgage, student loan, or an auto loan, you may have to check with several lenders causing multiple lenders to request your credit report racking up inquiries on your credit report.

So you should do all your rate shopping in a 10 day period because FICO Score counts all the inquires as one to compensate for this.

FICO Score also does not count inquiries that are "pre-approved" from a lender or to to review your account with them, even though you may see these inquiries on your credit report.

Will Closing old account raise my FICO Score?

No this will not raise your FICO Score, it actually can drop your FICO Score the reason being is that long-established accounts show you have a longer history of managing credit, which is a good thing!

Also, if you are trying to cancel your account due to late payments or bad history, they won't disappear off your credit report.

What's a good FICO Score

and how does a FICO score help you?

There's no one "score cutoff" used by lenders, it's hard to say what a good FICO Score is but it does range from 300 (very poor) to 850 (perfect).

FICO Scores give lenders a fast, objective estimate of your credit risk where as before it was a slow, inconsistent and unfairly biased process.

How can I check my FICO Score

and why should I?

You can check your FICO Score online at any credit reporting agency. The reason why you should is because lenders check your FICO Score so it would make sense to see how lenders see you.

Another reason you should check is the information on your credit report might be inaccurate, and you need to correct this information before applying for any credit.

Obtaining your credit reports and FICO Scores can help you understand how lenders view your credit risk!

It is also a good idea to check your FICO Score six months in advance before you plan to make a major purchase or obtain a loan.

Can FICO correct errors in my credit report?

No, FICO is not a credit reporting agency, it does not maintain credit information on individuals, and it cannot correct credit report errors.

How can I fix errors on my credit report?

You must contact the credit reporting agencies, not FICO.