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FICO scoring part I.

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They determine the rates you will pay for credit and whether or not you will receive credit at all.

They can be used to set your insurance rates.

And until recently, you weren’t allowed to see them.


FICO scores, a numerical representation of your creditworthiness, have only recently been available to the consumer.


A number ranging from 350 (bad) to 850 (excellent), these scores were intended as a numerical grade of your creditworthiness.

Fair Isaac and Company is the inventor and provider of FICO scores, information about which is a closely held secret. Fair Isaac has however released some general information about scoring, which is the subject of this writing.


First the basics:


In order for a FICO score to be calculated, the report must contain at least one account which has been open for six months or greater.

In addition, the report must contain at least one account that has been updated in the past six months.

If you do not meet those minimums, no FICO score will be calculated.


The process is simple. When a FICO score is requested, the consumers credit report is pulled and run through a computer program.

That program grabs the report's data and assigns a numerical score based on what's there.

A score is not part of your report, it is calculated on the spot whenever it's requested.


Assuming you have enough accounts to generate a score, here’s how Fair Isaac and Company, the proprietor of FICO scoring, explains each item on your report is used:


What you've done in the past:

35% of your score is based on Payment History.

This includes:


· Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)


· Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)


· Severity of delinquency (how long past due)


· Amount past due on delinquent accounts or collection items


· Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)


· Number of past due items on file


· Number of accounts paid as agreed


What you owe:

30% of your score is based on amounts owed:


* Amount owing on accounts

* Amount owing on specific types of accounts

* Lack of a specific type of balance, in some cases

* Number of accounts with balances

* Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)

* Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)



How long you've had credit:

15% of your score is based on age (not yours,the age of your credit accounts)


· Time since accounts opened


· Time since accounts opened, by specific type of account


· Time since account activity



What's new with you?

10% of your score is based on the presence of new credit:


* Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account

* Number of recent credit inquiries

* Time since recent account opening(s), by type of account

* Time since credit inquiry(s)

* Re-establishment of positive credit history following past payment problems



And what you're doing with it:

10% of your score is based on type of credit used:


* Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)


This information is straight from Fair Isaac and Company, shamelessly copied from their consumer website, here:


And Here’s what Fair Isaac says is NOT included in your score:


* Your race, color, religion, national origin, sex and marital status.

US law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.

* Your age.

Other types of scores may consider your age, but FICO scores don't.

* Your salary, occupation, title, employer, date employed or employment history.

Lenders may consider this information, however, as may other types of scores.

* Where you live.

* Any interest rate being charged on a particular credit card or other account.

* Any items reported as child/family support obligations or rental agreements.

* Certain types of inquiries (requests for your credit report).

The score does not count “consumer-initiated†inquiries – requests you have made for your credit report, in order to check it. It also does not count “promotional inquiries†– requests made by lenders in order to make you a “pre-approved†credit offer – or “administrative inquiries†– requests made by lenders to review your account with them. Requests that are marked as coming from employers are not counted either.

* Any information not found in your credit report.

* Any information that is not proven to be predictive of future credit performance.

* Whether or not you are participating in a credit counseling of any kind.

Also shamelessly copied from the horse's mouth:



What’s the average FICO score? According to Fair Isaac, the distribution of scores is as shown here:


<499 2%

500-549 5%

550-599 8%

600-649 12%

650-699 15%

700-749 18%

750-799 27%

800+ 13%


Humbling, isn't it? I prefer to think the majority is in the low-600 range.

Nevermind why.


That’s it for the publicly available information.

If you are assuming there’s probably more to it than that, you are correct.


See part two-

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