Fair, Isaac and Co. is the creator of the FICO score, a widely used credit scoring model that determines a person's creditworthiness or debt risk. There are three FICO scores, one for each of the Big Three credit reporting agencies: TransUnion, Equifax and Experian. These scores are calculated, on average, from a minimum of one account that has been open or updated for at least six months.
How to Get a Copy of your Credit Report (Free)
One of the more popular places to go online and get a copy of your credit report with your FICO score is annualcreditreport.com. You can get a free copy of your credit report once a year, or if you have recently been turned down for credit. Though you may request a free annual credit report separately from each of the Big Three, it is advisable to get a combination report. It may be lengthy (or not), but that way you can have all three FICO scores in hand. Average them by adding the three scores together, then divide the sum by three. You will then know your overall FICO score and see it the way lenders and mortgage companies do.
About FICO Scoring
The FICO score itself means nothing without the rest of the credit report. However, the two work hand-in-hand. The FICO score is a numeric picture of how all of your credit---assets, debts and liabilities look like when rolled into one. The number is then compared with the numbers of everyone else appearing on the credit reporting system and rated accordingly by a ratio called debt-to-income. A debt-to-income ratio is the percentage of a consumer's monthly gross income that goes toward paying debts.
Credit Report Essentials
A credit report is divided into four basic sections: identifying information, credit history, public records and inquiries. Other types of information may include your current and prior addresses, date of birth, telephone numbers, your driver's license number, the name of your current employer, and your spouse's name. The account information will include the name of the creditor and the account number of the trade line. It may also include when the account was opened and any other name or names on the account, as well as the the limits and balances due.
Determining the FICO Score
Your overall score is a matter of having a zero (never having had credit or not enough to report), or having a point 1, meaning that you paid the credit account(s) as agreed. Point 2 means the account was up to 59 days past due when last paid; Point 3 means it was more than 60 but less than 90 days past due; and a Point 5 means the account is more than 120 days past due. Another FICO factor is what is called a "date indicator" that tells the scoring system whether or not the account was paid out in full, closed, declined or charged off. Creditors do not typically subscribe to all three services, so each report will have different information.
How Does FICO Scoring Work?
A bill paid off on time or when due every month adds up to what is called your "credit experience." Likewise if it is paid late, slow, or changed off. According to Fair, Isaac and Co., the FICO score breakdown is as follows: 35 percent is equal to the payment history, 30 percent is the outstanding amount of any reported credit that is owed, 15 percent is credit history length, 10 percent is any new credit obtained and 10 percent is the types of credit used.
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