A FICO is a mainstream credit score computation developed by Fair Isaac Corporation. All three major credit bureaus, Experian, TransUnion, and Equifax, use the FICO scoring model to determine a person’s credit worthiness. A person’s credit worthiness is portrayed in the scoring model where a higher FICO score indicates better credit while a FICO score below 600 is deemed poor. Debt relief and FICO scores go hand in hand. Fortunately, there are debt relief options including credit repair and credit counseling that help people improve their FICO score and improve their overall credit worthiness.

FICO Score Basics:

A FICO score is calculated using a number of factors, with each factor weighing in differently based upon its assigned amount of importance.

One of the most important factors that impact a FICO score is the promptness of payments – meaning on-time payments. This shows current lenders and creditors as well as future ones that the person is more likely to pay off the loan. People who consistently make their payments on time and have never been thirty days overdue generally have much higher credit scores than those who aren’t timely. Always remember, a good record of repayment will result in a raised FICO score, while missed payments and late payments will make negative changes in FICO score.

In addition to maintaining consistent, on-time payments, the total amount of debt one has accumulated is weighted heavily into the scoring model. The ratio of total debt amassed compared to the total sum of available credit gives creditors an indication of one’s likelihood of paying off the debt, and in what amount of time. Equipped with that knowledge, those creditors can make an informed and responsible decision about your ability to carry more credit. Generally speaking, the lower the balance carried on a given card, the higher the FICO score will be.
Changes in FICO scores occur for a number of reasons. A tax lien for example or court case can negatively affect the overall score as will applying for several different credit cards in a short period of time.

Credit reports should be regularly monitored to ensure accuracy and also acquire the knowledge to attain financial objectives. Information from credit reports is essential to maintaining healthy finances. In the end, a higher FICO score not only saves money, but provides financial options equipping consumers with the power of choice.

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Tags: Credit Bureaus, Credit Card Debt, Credit Help, Credit Reports, Credit Scores, Debt Relief, FICO, FICO Score, Personal Finance