Credit Report Information

FICO Scores, Save your Credit
Credit Report Information: Credit scoring is a scientific method that uses statistical models to assess an individual's worthiness based on their history and current accounts. We can save your credit before it becomes worse.

Credit scoring was first developed in the 1950s, but has come into increasing use in just the last two decades. In the early 1980s the three major credit bureaus, Experian, Equifax and Trans Union all worked with the Fair Isaac Company to develop generic scoring models that allow each bureau to offer a score based solely on the contents of the credit bureau's data about an individual. Contact Us about "Save your Credit".

Creditors especially in the mortgage industry frequently use these scores, known as FICO scores, as an important factor in the decision whether or not to offer credit.

FICO Scores range from 375 to 900 points, but those numbers mean little on their own. In general, you are likely to be considered a better credit risk if your FICO score is high. Under mortgage lending guidelines, for example, a score of 640 or above indicates a very good credit history.

FICO Scores between 620 and 650 (average FICO scores fall into this range) indicate basically good credit, but also suggest to lenders that they should look at the potential borrower to assess any particular credit risks before extending a large loan or high loan limit. People in this range have a good chance at obtaining a loan at a good rate, but may have to provide additional documentation and explanations to the lender before a large loan is approved.

A score below 620 may prevent a borrower from getting the best interest rates, as they may be considered a greater credit risk-but it does not mean that they can't get credit. The process will probably be lengthier and, as noted, the terms may be less appealing, but often credit can still be obtained. The widespread use of credit scoring such as the Credit Bureau Scores developed using the FICO model allows for speedy, objective analysis of credit histories. Because it is objective and based on large volumes of verified statistical data, credit scoring brings a new level of fairness to the credit-granting process. FICO or Credit Bureau score is based on data drawn from your credit report. About 30 individual factors are used to determine the score. These can be categorized in five areas (in order of importance):

• Payment history. Does the record show frequent late payments, public records such as judgments or bankruptcy, or derogatory notes like charge-offs or accounts turned over to collections?
• Outstanding debt. How many outstanding balances appear on the report? What is the average balance? What is the ratio of total balances to total limits on revolving debt (e.g., credit cards, a home equity line).
• Credit history. How long have you had your oldest account?
• Pursuit of new credit. How many inquiries and new accounts does your report show, and how recent are they? How long has it been since the most recent inquiry?
• Types of credit in use. How many accounts are reported for bank cards, travel and entertainment cards, department store cards, installment loans, and so on. Also informative is the list of "reasons" that may be provided to account for why a score isn't higher.

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