FICO Scores
A credit or FICO score is a numeric representation of a person's credit profile. The higher the scores, the lower credit risks. The acronym FICO stands for Fair Isaac Company. FICO scores have been around for several years. Scoring began in 1995 for the purpose of keeping down the expense associated with underwriting home equity loans. In 1996 the Federal Government insisted on a credit score on all credit reports. The scores are based on years of computer modeling aimed at predicting who might be a credit risk. There has never been a published model of how exactly a score is derived. The secrecy of the FICO model reduces the likelihood of manipulation.Example of a FICO score and listings on a credit bureau;
FAIR ISAAC/EXPERIAN INFORMATION:
B 555-55-5555 SANDOVAL, PETER V.
CREDIT RISK SCORE 0520 Positive
FAIR ISAAC REASON CODES
38 SERIOUS DELINQUENCIES AND PUBLIC RECORDS
13 LENGTH OF TIME SINCE ACCOUNT DELINQUENT
18 NUMBER OF ACCOUNTS DELINQUENT
20 LENGTH OF TIME SINCE LEGAL ITEM FILED
The FICO score is derived from the following criteria:
- Balances owed vs. credit available or high credit
- Number of 30, 60, and 90 day late payments
- Public records that include; judgements, tax liens or bankruptcies
- Length of credit history
- Recency of any slow pay history
- Number of balances opened in the last 6 months
- Excessive credit inquiries