FICO is a quirky little tool that lenders use to evaluate your creditworthiness. Your projected ability to pay is reduced to a single number. Your mortgage payments, car payments, and credit card bills over the years have been analyzed, sliced, diced, spindled and mutilated into your FICO score, a single indicator of whether you’re likely to meet your future obligations.
- Credit History: How long have you had credit?
- Payment History: Do you pay your bills on time?
- Car loans, Student Loans, Bank Loans: Too many?
- Credit Card Balances: How much of your available credit are you using?
- Credit Inquiries: How many times have you had your credit checked?
- Lawsuits and Judgements: Are you in legal trouble?
What can you do about your FICO score?
The way in which actuaries have developed FICO formulas offers some surprises. For instance, customers with no debt in the world often have lower scores than those with a good track record of making steady payments on current loans. Go figure.
When you apply for a mortgage loan, your lender will tell you your blended FICO score. Most lenders use credit scores from each of three national credit agencies. If you don’t like surprises, you can get your scores in advance from various websites, but your lender’s version is likely to be more comprehensive than those you obtain online.
Conveniently, at annualcreditreport.com, you may review your credit history once a year for free.
The three national credit agencies that track your credit history and create your FICO scores offer their own websites. Visit by clicking the logos below:
Armed with this information, you will be a more informed consumer and be better positioned to obtain the most favorable mortgage possible. AND, you can be sure there are no mistakes feeding into the database that will drive your score lower than the one you deserve.