Scoring your Credit - How's your FICO?
In today's increasingly automated society, it should come as no surprise that when you apply for a mortgage, your ability to pay can be reduced to a single number.
All three of the major credit reporting agencies (Equifax, Experian and TransUnion) use a slightly different system to arrive at a score. The best known is called the FICO score, based on a model developed by Fair Isaac and Company (hence the name) and used by Experian. Equifax's model is called BEACON, while TransUnion uses EMPIRICA. The primary factors of the models are:
- Payment History - Do you pay your bills on time?
- Credit History - How long have you had credit?
- Credit Card Balances - How much of your credit limit are you using?
- Credit Inquiries - How many times have you had your credit checked?
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Each of these, and other items, are assigned a value and a weight. The results are added up and distilled into a single number. FICO scores range from 300 to 800, with higher being better. Typical home buyers likely find their scores falling between 600 and 800.
FICO scores are used for more than just determining whether or not you qualify for a mortgage. Higher scores indicate you are a better credit risk, and thus may qualify for a better mortgage rate.
What can you do about your FICO score? The score is based on a lifetime of credit history, it is difficult to make a significant change very quickly,check out my page on how to improve your credit score. You can get a copy of your credit report for free thanks to a government mandated credit reporting web site click here to visit freeannualcreditreport.com use this site to check the accruacy of your credit information. Fair Isaac has created a site www.myFICO.com) that let's you, for a reasonable fee, get your FICO score from all three reporting agencies, along with your credit report. Also available is some helpful information and tools that help you analyze what actions might have the greatest impact on your FICO score. Each of the credit services offers similar services on their web sites: www.equifax.com, www.experian.com, and www.transunion.com.
Armed with this information, you will be a more informed consumer and better positioned to obtain the most favorable mortgage available to you. Let me help before you do anything that may affect your credit score. | 
