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What is FICO?
- All three US and both Canadian reporting agencies have
FICO scores available. They are BEACON at Equifax,
EMPIRICA at TransUnion
and EXPERIAN/FAIR, ISAAC MODEL at Experian.
- Origination: Bill Fair and Earl Isaac founded the company
in 1956, and the name, FICO, comes from the initials of Fair,
Isaac and Company.
- Developed to analyze data and turn it into information
that benefits financial institutions and other businesses to help
them remain profitable.
- Lenders use credit scores to get a quick objective
look at the credit risk of the borrower. Credit scores help lenders
focus on facts regarding credit risk so they can approve more
loans, and helps make credit decisions more fair and consistent.
Credit scores also help make credit granting more efficient and
less costly.
How does the USUCCU use the Score?
We use the score to evaluate the risk of each loan applicant. Other
information from the application is used in the decision process
as well. The decision to approve or decline the loan is made by
the loan officer based on all criteria. The credit score determines
what rate we will charge for the loan.
SCORE FACTORS -There are five main categories that make up a credit
bureau score:
- Payment history, which looks at how well you pay your
bills on time.
- Amounts you owe on your credit lines and other loans.
- How long you have had credit. You need to keep your
loan at least six months to get a score.
- New credit, which looks at how much new debt you have.
- Types of credit you have.
The score looks at all of these categories with both positive and
negative information. Inquiries indicate risk and can affect your
score as well.
Improving a Score:
- Make your payments on time.
- Keep low balances on credit cards.
- Only open new credit when you really need it.
- Pay off your debt; donÍt just move it to another credit
account.
- Make sure your credit information is correct. You can
contact the credit bureau directly to get a copy of your credit
report and make corrections if necessary.
- Stay informed about your credit.
Request copies of your credit reports annually from:
Avoid:
- Making late payments.
- High balances on credit cards.
- Opening too many new credit cards.
- Moving debt around.
- Collection accounts.
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