Scoring your Credit - How's your FICO


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Scoring your Credit – How’s your FICO?


Because our society is so automated, it should come as no surprise that your ability to repay your mortgage loan boils down to one number. The FICO score is created by credit reporting agencies. These agencies use the payment history from your various loans: mortgages, car loans, credit cards, and others.

Each of the three credit reporting agencies has its own formula for building your credit score. Fair Isaac and Cooriginally developed this score. While Experian still calls its score “FICO” , TransUnion calls its score “Beacon” and Equifax uses “Empirica.” While the formulas vary, the differences aren’t huge; all of the agencies use the following in building your score:

  • Your Credit History – Have you had credit for many years, or for just a short time?
  • Late Payments – Do you have any payments later than 30 days?
  • Balances on your Credit Cards – How many accounts do you hold, and how much do you owe on them?
  • Credit Inquiries – How many times have lenders pulled your credit for the purpose of giving you a loan?

These factors are assigned weights based on the formula being used. The result is one number. FICO scores can be as low as 300 and as high as 850. Higher is always better. Most home buyers these days have a score above 620.

Not just for qualifying

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 credit score?

Unfortunately, there isn’t a lot you can do to immediately improve your credit score. Despite what you hear from “credit repair” companies, the score is based on your lifetime credit history, so it’s not possible to raise it significantly in the short term. You should, of course, remove any incorrect reporting on your credit report; this is really the only “quick x” for credit troubles.

How do I find out my credit score?

Before you can improve your credit score, you must obtain your score and ensure that the credit reports from each credit reporting agency are correct. Fair Isaac has created a web site ( ( that lets you do just that. It’s inexpensive, fast, and easy to get your credit score along with reports from all three agencies. They also provide information and tools that help you understand how to improve your credit score.

You can get a federally-mandated free credit report once per year from the three major credit reporting agencies when you visit ( These reports do not include a free credit score, but it’s very inexpensive to get one at the same time.

Armed with this information, you’ll be a more informed consumer and you’ll be better positioned to obtain the right mortgage for you.

Curious about your credit score?

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