All three of the major credit reporting agencies (Equifax, Experian and TransUnion) use a slightly different system to arrive at a score. The best known is called the FICO score, based on a model developed by Fair Isaac and Company (hence the name) and used by Equifax. Experian's model is called Plus Score, while TransUnion is called TransRisk. While each of the models considers a range of data available in your credit report, the primary factors are:
- Credit History. How long have you had credit?
- Payment History. Do you pay your bills on time?
- Credit Card Balances. How much do you owe on how many accounts?
Each of these, and other items, are assigned a value and a weight. The results are added up and distilled into a single number. FICO and other scores range from 300 to 850, with higher being better. Typical home buyers likely find their scores falling between 670 and 770.
FICO scores are used for more than just determining whether or not you qualify for a mortgage. Higher scores indicate you are a better credit risk, and thus may qualify for a better mortgage rate.
What can you do about your FICO score? Call or email us, little known techniques can raise it by 10 to 20 points or more within 30 days. Know your FICO score and ensure that your credit history is correct. Conveniently, Fair Isaac has created a web site www.myFICO.com) that let's you do just that. For a reasonable fee, you can quickly get your FICO score from all three reporting agencies, along with your credit report. Each of the credit services offers similar services on their web sites: www.equifax.com, www.experian.com, and www.transunion.com.