Your FICO and Credit Score Explained

There are several different types of credit scores available. The three major credit bureaus in the U.S. use scores that are produced by Fair Isaac and Company, hence FICO. The three credit reporting agencies that provide these scores to lenders are: Experian, TransUnion, and Equifax.

Your FICO score can range from 300 to 850. Lenders use these scores, along with other factors, to determine your credit worthiness. The higher the score the better chance you have of getting a loan. A higher score will also get you a better interest rate.

There are several factors that will affect your FICO score. Some are:

1. Length of credit history
2. Outstanding debt
3. Payment History
4. The amount of credit used verses credit available
5. Frequency of derogatory information
6. Severity of derogatory information
7. Number of inquires
8. Number of delinquencies

FICO scores are updated once a month, generally around the 21st through the 29th.
They are calculated on the previous month's activity. They can vary from agency to agency, depending on what that agency has on their file. Not all creditors report to all agencies. Some creditors don't report to any of them.

Your FICO score will change as your credit history changes. If your lender uses one agency to check your credit when you apply for a loan, then checks it with another later, that will make your score change. But, only within that lending institution.

Each creditor decides what range to use in considering who will be a good risk. They use your FICO score along with some or all of the above factors to determine your credit score to see:

* If you are a good credit risk
* How much and what type of interest you will pay

Check on your credit score often to make sure there's nothing going on that you don't know about. Some credit card companies have your FICO score on their website. If you pay your bill online, you can check on your score while you are there. That way you can keep a close eye on your score. Your credit score will vary some month to month but, not much. It shouldn't vary more than 5 or 6 points. If moves more than that find out why.

You are entitled to a free copy of your credit report once a year. You can also get a free report if:

1. You have been denied credit because of information on your report. (You have to request a copy within 60 days.)
2. You believe your report has errors stemming from fraud.
3. You receive public assistance.
4. You are unemployed and looking for work.

If you don't qualify for a free report, you can get one from any of the credit bureaus for a small fee. Contact information for the three reporting agencies is:
Equifax
P.O. Box 740241
Atlanta, GA 30374
Phone # 800.684.1111
http://www.equifax.com

TransUnion
P.O. Box 1000
Chester, PA 19022
Phone # 800.888.4213
http://www.yuc.com

Experian
P.O. Box 2104
Allen, TX 75013
Phone # 888.397.3742
http://www.experian.com

When contacting the credit bureau, you will need to provide them with the following information.

* Your full name. (including generations if any)
* Your spouse's name (if applicable)
* Your current address
* Your addresses for the last 5 years.
* Your birth date.
* Your social security number.
* Your phone number.

Copyright 2007 Robert Hughes

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