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What Is Your FICO Score

Understanding your FICO score and how it affects your ability to obtain credit.

FICO scores

REMOVING SOME OF THE MYSTERY ABOUT CREDIT SCORING
Fair, Isaac Co., the major provider of credit scoring systems to lenders, revealed how it determines credit scores, also know as FICO scores.  Many lenders use these scores to predict how likely a borrower is to repay a loan.

 FIVE MAIN FACTORS INFLUENCE YOUR FICO SCORE:

1) PAYMENT HISTORY
     Payment history accounts for about 35 percent of your score.  Paying     your bills on time is the best way for you to receive a high FICO score.

2) YOUR CURRENT DEBT
      About 30% of your score is determined by how much you currently owe.  If you owe a lot of money in relatio lto your available credit limits, you may appear over extended.  The key is to keep your balances low on unsecured debt such as credit cards.  Even closing unused accounts may not improve your score.

3) HOW LONG YOU’VE HAD CREDIT
     The longer you’ve had credit and handled it responsibly, the better your FICO score will be.  The length of your credit history accounts for 15% of your score

4) APPLICATIONS FOR NEW CREDIT
     Applying for several credit accounts in a short period of time could indicated that you may soon be over extended and may lower your score.  This is about 10% of your score.

5) MIX YOUR CREDIT
     The final 10% of your score is determined by the kinds of credit accounts you have, such as credit cards, retail accounts, installment loans, finance company loans and mortgage loans, and how many of each.

    Ther are other elements, mostly subcategories of the items listed above, that go into your score, including your occupations, time at present job, time at your current address, home ownership and much more.  For more information or to obtain a copy of your FICO score, visit www.fairisaac.com

Following these guidelines will help you obtain better financing rates when you are ready to purchase your next home.

Give us a call with any real estate questions you may have, we’re here to help and we answer our phones!

Pam Parton and Joanna Woolley
760-580-1615 or 7605801630

Brian Olenik of
Corinthian Title
contributed to this article