FICO stands for the Fair Isaac Corporation, the creator of the FICO scoring method that is used to evaluate an individual's credit worthiness. Proxy agreements are legal documents that give authorization for someone to act on another party's behalf.
The FICO Scoring Method
FICO scores range within a scale of 300 to 800. FICO scores are obtained through statistical models that examine an individual's credit report for payment history, current debt-to-income ratios, types of credit lines and length of credit history. A FICO score is obtained any time an individual wishes to obtain financing from a lender.
Proxy Agreements in Relation to Credit Rating Agencies
The idea of proxy agreements comes into play with credit reporting agencies, as they actively disclose nonpublic information. In fact, they gather, compile and organize sensitive information on individuals in order to release that history should it become necessary. Essentially, they are legally acting on any consumer's behalf who is of legal age with an established credit history.
Credit Agency Information Determines FICO Score
Agencies such as TransUnion and Experian keep record of the account information they receive from an individual's lenders. Acting on an individual's behalf, they release a FICO score to any new lender that the individual has authorized. The authorization is typically signed by the individual during the financing process.
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