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A FICO
score is a credit score/number developed by
Fair Isaac & Co. Credit scoring is a method
of determining the possibility that
borrowers will pay their bills. Fair Isaac
began its pioneering work with credit
scoring in the late 1950s and, since then,
scoring has become accepted widely by banks
as a reliable means of credit evaluation. A
credit score attempts to condense a
borrower’s credit history into a single
number. Fair, Isaac & Co. and the credit
bureaus (Equifax, Trans Union, and Experian)
do not reveal how these scores are computed.
This is acceptable according to The Federal
Trade Commission |
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Credit
scores are calculated by using scoring
models and mathematical tables that assign
points for different pieces of information
which best predict future credit
performance. Developing these models
involves studying how thousands, even
millions, of people have utilized credit.
Score-model developers find predictive
factors in the data that have proven to
indicate future credit performance. Models
can be developed from different sources of
data. Credit bureau models are developed
from information in consumer credit bureau
reports. |
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Credit scores analyze a
borrower's credit history considering
several factors such as: |
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Employment history |
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Late
payments |
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The
amount of time credit has been established
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The
amount of credit used vs. the amount of
credit available |
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Length of
time living at your present residence |
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Negative
information such as bk’s, charge-offs,
collections, etc |
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There are
really three 3 scores computed by data
provided by each of the 3 credit
bureaus--Experian, Trans Union and Equifax.
Some lenders use one of these 3 scores,
while most lenders use the middle score. |
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How can I
improve my credit score? |
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While it
is difficult to improve your score over a
short period of time, here are some tips to
improve your score over an extended period
of time. |
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Pay your
bills on time every month. Making late
payments and collections can have a negative
impact on your score. |
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Do not
apply for credit often. Possessing a large
number of credit inquiries on your credit
report can negatively affect your score. |
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Reduce
your credit card balances. Being "maxed" out
on your credit cards will affect your
credit score negatively. |
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If you
have limited credit, get additional credit.
Not having enough credit can negatively
affect your score, too. |
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How may I
obtain a Free Credit Report? |
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You are
entitled to one free credit report from each
of the 3 credit bureaus per year.
However, the credit reports do not contain
your credit score; they only contain
creditor and debt information. A fee
must be paid to get your credit scores.
You are also entitled to a free credit
report if you suspect that someone has used
your information fraudulently. |
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To get
your Free Credit Report today, please visit
the official website: |
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What if I
find an error in my credit report?
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If you find an error on your credit report,
report it to the credit bureau as soon as
possible, especially if it involves fraud. |
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The 3 major
credit bureaus in the United States are: |
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Equifax (1-800-685-1111) |
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Trans Union (1-800-916-8800)
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Experian (1-888-397-3742)
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All 3 credit bureaus have procedures for
correcting information promptly. Your home
loan consultant may also help you to correct
any problems or inconsistencies with your
credit profile. |
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