Your (FICO) Credit Score

The FICO® score is created by credit agencies. These agencies use the payment history of all of your loans: mortgages, vehicle loans, credit cards, etc.


Fair Isaac and Company originally developed this score.  Experian, TransUnion, and Equifax, the three major credit agencies, each have their own proprietary formula for building your credit score.  While each of the models considers a range of data available in your credit report, the differences aren't huge; they all use the following factors in calculating your score:


·         Credit History - Have you had credit for years or for a short time?

·         Payment History - Do you pay your bills on time?

·         Balances on your credit cards - How many accounts do you have, and how much do you owe on them?

·         Requests for credit - How many times have lenders pulled your credit for the purpose of lending you money?


These factors are weighed differently depending on which formula the agency uses. Each formula produces a single number which may vary a little from one agency to another. Credit scores can be as low as 300 and as high as 800. Higher is always better. Most home buyers will probably find their scores falling between 620 and 800.


Your score affects how much you pay in interest every month

FICO® scores affect more than your ability to get a loan. They also affect your interest rate. Higher scores indicate you are a better credit risk, and thus may qualify for a better mortgage rate.


Raising your credit score

Unfortunately, there isn't a lot you can do to immediately improve your credit score. Some companies promise quick fixes, but they can't do anything different than what you can do — for free. You should, of course, remove any incorrect reporting from your credit report; this is the only "quick fix" for credit troubles.


Know your FICO®

Fair Isaac sells FICO® scores on its website: It's inexpensive, fast, and easy to get your credit score along with credit reports from all three credit reporting agencies. Also available, are information and tools that help you analyze what actions might have the greatest impact on your FICO® score.


You can get a free credit report every year from all three credit reporting agencies at While this report does not include a free credit score, the cost to "upgrade" your report to include a credit score is very reasonable.


Now that you have all the facts, you will be a more informed consumer and you'll be better positioned to get the most favorable mortgage.