Credit Tips and Resources
David Migoya of the Denver Post wrote a July, 2008 article about the importance of knowing your personal FICO® scores. Click on the link below to read the article:
Consumers ignore credit scores at their peril... Article by David Migoya of the Denver Post
As is discussed elsewhere through out the site, a higher credit score can translate into hundreds of thousands of dollars in savings for consumers. Your Authorized Credit Guardian™ will help you know what you can do to keep you scores as high as possible.
Here are some credit facts and tips from about your credit score commonly known as a FICO score and how FICO scores are calculated. (Source: Fair Isaac Corporation)
About FICO scores
Credit bureau scores are often called "FICO scores" because most credit bureau scores used in the U.S. are produced from software developed by Fair Isaac and Company. FICO scores are provided to lenders by the major credit reporting agencies. FICO scores provide the best guide to future risk based solely on credit report data. The higher the credit score, the lower the risk. But no score says whether a specific individual will be a "good" or "bad" customer. And while many lenders use FICO scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable for a given credit product. There is no single "cutoff score" used by all lenders and there are many additional factors that lenders use to determine your actual interest rates.
Other Names for FICO Scores
FICO scores have different names at each of the credit reporting agencies. All of these scores, however, are developed using the same methods by Fair Isaac, and have been rigorously tested to ensure they provide the most accurate picture of credit risk possible using credit report data.
| Credit Reporting Agency |
FICO Score |
| Equifax |
BEACON® Score |
| Experian |
Experian/Fair Isaac Risk Model |
| TransUnion |
EMPIRICA® |
What factors make up my FICO score?
These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.
Payment History
- Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
- Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
- Severity of delinquency (how long past due)
- Amount past due on delinquent accounts or collection items
- Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
- Number of past due items on file
- Number of accounts paid as agreed
Amounts Owed
- Amount owing on accounts
- Amount owing on specific types of accounts
- Lack of a specific type of balance, in some cases
- Number of accounts with balances
- Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
- Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)
Length of Credit History
- Time since accounts opened
- Time since accounts opened, by specific type of account
- Time since account activity
New Credit
- Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
- Number of recent credit inquiries
- Time since recent account opening(s), by type of account
- Time since credit inquiry(s)
- Re-establishment of positive credit history following past payment problems
Types of Credit Used
- Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)
How do FICO credit scores work?
When you apply for credit — whether for a credit card, a car loan, or a mortgage — lenders want to know what risk they'd take by loaning money to you.
- FICO scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus — Experian, TransUnion, and Equifax. Each credit score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well.
- Your 3 FICO credit scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time.
- Taking steps to improve your FICO scores can help you qualify for better rates from lenders.
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