How FICO Credit Scores Are Calculated

	Looking for a loan? We can help! Call us at 503-780-7527. Ready to begin? Apply Here.

Because we live in a computer-driven world, you're probably not surprised to hear that your creditworthiness boils down to a single number. Credit reporting agencies use your history of paying loans in order to compile this score.

Each of the three credit agencies has its own formula for building your credit score. The original FICO score was developed by Fair Isaac and Company. While Experian still calls its score "FICO", TransUnion calls its score "Beacon" and Equifax uses "Empirica." While each of the models considers a range of data available in your credit report, the differences aren't huge; each agency uses the following in building a score:

• Your Credit History - How long have you had credit?
• Payment History - Have you paid more than 30 days late?
• Your Credit Card Balances - How many accounts do you carry? How much do you owe?
• Requests for Credit - How many times have you had your credit checked for a loan?

These factors are weighted slightly differently depending on which formula the agency uses. The results are added up and distilled into a single number. FICO scores range from 300 to 800. Higher is better. Most home buyers have a score above 620.

Your FICO score greatly affects your monthly payment

Credit scores are used for more than just determining whether or not you qualify for a mortgage. Lenders give lower interest rates to individuals with higher scores.

Can I improve my FICO score?

How can you raise your credit score? Despite what you hear from "credit repair" companies, the score is built on your lifelong credit history, so you can't turn it around right away. (Of course you can and should appeal incorrect items on your credit report.)

How do I find out my FICO score?

In order to improve your score, you've got to have the reports that are used to build it. Of course, you need the score as well. Fair Isaac, the company that offered the first FICO score, sells FICO scores on myFICO.com. For a reasonable fee, you can get your FICO score from all three reporting agencies, along with your credit report. Also available are helpful information and tools that can help you improve your credit score.

You can get a federally-mandated free credit report once a year from all three agencies when you visit AnnualCreditReport.com. While this report does not include a free credit score, the cost to "upgrade" your report to include a credit score is very reasonable.

Now that you have all the facts, you'll be a more informed consumer and you'll be better positioned to get the right mortgage for you.

Curious about your FICO score? Call us: 503-780-7527.