FICO Scores Explained

 Your credit report contains personal information, credit account history, credit inquiries and public records. This information is reported by your lenders and creditors to the credit bureaus. Much of it is used to calculate your FICO® Scores to inform future lenders about your creditworthiness.

Although each of the credit bureaus Experian, Equifax and TransUnion—

format and report your information differently, all credit reports contain basically the same categories of information.

 You can improve your FICO Scores by first fixing errors in your credit history (if errors exist) and then following these guidelines to maintain a consistent and good credit history. Repairing bad credit or building credit for the first time takes patience and discipline. There is no quick way to fix a credit score. In fact, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast. 

Did you know you have more than one FICO® Score? Since FICO® Scores were introduced to lenders over 25 years ago, they have become the best-known and most widely used credit score. But quite a bit has changed since lenders first started using FICO Scores in 1989. Lender credit-granting requirements, data reporting practices, consumer demand for credit and consumer use of credit have all evolved.

 A FICO Score is a three-digit number based on the information in your credit reports. It helps lenders determine how likely you are to repay a loan. It affects how much you can borrow, how many months you have to repay, and how much it will cost (the interest rate). 

 FICO Scores are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%). 

Credit mix determines 10% of a FICO® Score. FICO® Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It's not necessary to have one of each, and it's not a good idea to open credit accounts you don't intend to use.