FICO Credit Score

Check average credit scores to compare your credit score with others in your state.

A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrowers credit history into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable.

There are other credit bureau scores, although FICO scores are by far the most commonly used. A FICO score is the method that many lenders use to determine whether to accept or reject your mortgage application as well as setting fees and rates.

Also informative is the list of "reasons" that may be provided to account for why a score isn't higher. When lenders request your credit score, they also receive a list of the four most significant reasons your score is not higher. Although lenders do not have to tell you your score, they should share the reasons listed on the credit report with you.

Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information which best predict future credit performance. Developing these models involves studying how thousands, even millions, of people have used credit. Score-model developers find predictive factors in the data that have proven to indicate future credit performance. Models can be developed from different sources of data. Credit bureau models are developed from information in consumer credit bureau reports.

Credit scores analyze a borrower's credit history 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.

There are really three FICO scores computed by data provided by each of the three bureaus--Experian, Trans Union and Equifax. Some lenders use one of these three scores, while other lenders may use the middle score.

While it is difficult to increase your score over the short run, here are some tips to increase your score over a period of time.

Pay your bills on time. 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.

Your FICO Score is calculated by following criteria:

Previous credit performance (35%): Information about the way you paid your credit accounts in the past, including late payments and bankruptcies. FICO considers whether you have accounts in collection; whether you have any delinquencies, and how frequent and recent they are; and whether you make your payments on time. How much impact each item has on your score depends on what other information is in the report. For instance, one late payment may not affect your score significantly if the rest of your history is good, because the model looks at credit patterns, not isolated credit mistakes. In addition, FICO gives you points for maintaining a good payment relationship.
Current level of indebtedness (30%): The amount of credit you are using, and the amount of credit still available. FICO considers the number of balances recently reported, the average balance across all trade lines, and the relationship between the total balance and total credit limit. FICO considers your current level of borrowing and whether you are close to or over your limit. Carrying too much credit is held against you even if you do not have balances on those cards.
Time credit has been in use (15%): The number of months your credit accounts have been on your credit report. FICO looks at how long you have had your account, the total number of inquiries and new accounts opened, the number of inquiries and new accounts opened in the last year, and the amount of time since the most recent inquiry. Banks, department stores, employers or landlords make "inquiries" on your credit report every time you apply for credit or a loan at that institution. The FICO scoring model considers inquiries because statistics show that those anticipating financial troubles try to increase the number of credit lines they have available. The FICO model has taken into account certain lender practices that normally would negatively affect your credit report. For instance, if you were interested in buying a car and the dealer agreed to finance you, the dealer may run credit inquiries on various lenders, which would then show up as numerous inquiries on your credit report.
Types of in use (10%): FICO looks at the diversity of credit you use, whether you use bankcard, travel and entertainment cards, department store cards, personal finance company references, and/or instalment loans.
Pursuit of new credit (10%): Inquiries - The number of times you have applied for credit in the recent past.
Negative Information: Negative information in your credit report that could impact the FICO score includes bankruptcies, delinquencies or late payments on accounts, collections, too many credit lines with maximum available funds borrowed, too little credit history (less than five credit lines in the past two years), and too many credit report inquiries.

Information FICO Does Not Consider includes:

FICO does not consider your race, color, religion, national origin, sex, sexual orientation, marital status or age.