FICO (Fair Isaac COrporation) is a credit score that is given to each individual. This method of credit scoring is based on determining the likelihood that credit users will pay their bills. Since the late 1950’s, scoring has become accepted by lenders as a means of credit evaluation. When you are looking to buy a home, a car or any other large purchase by credit, lenders are interested in checking your credit score. Nowadays creditors are interested in looking at your FICO score. What is a FICO score you may ask? When a credit report is generated for a purchase of a home, for example, a total score is generated when your information is inputted. There are many factors that are considered when reaching a score. Like, whether you pay your credit cards, loans, or any other credit items in a timely fashion. Scores range from a low of 300 to high of 900.

Your credit score is broken down into 5 categories

• 35 percent of the score is based on your payment history. Lenders want to know if you have paid your bills on time.
• 30 percent of the score is based on outstanding debt. This arises the questions, how much money do you owe? For the new car? Your new home? Rule of thumb, the more cards you have at their limits, the lower your score will be.
• 15 percent of the score is based on the how long you've had credit. The longer you’ve had credit the better your score, since there will be more information about your payment history, which gives a more accurate prediction of your future payment actions.
• 10 percent is comprised of your recent history, based on your efforts to obtain loans or credit lines in the past few months.
• 10 percent of the score is based on the types of credits used, including installment loans (like car loans), leases, mortgages, credit cards, etc.

Your FICO score gets affected by payments that exceed 30 days, they will appear in your report as a late payment. For example, if you receive a bill on the 1^st of the month with a due date of the 15^th. If you cannot pay your bill within the due date you will be charged interest, but if you don’t pay by the 30^th of that month, it will be considered a late payment and that information will be added to your FICO score. My advice, pay all your bills on time. Remember, even if you pay any delinquent payments you may have, that will not improve your score, such information remains in your report for 7 years

By keeping the balances of all your credit cards high, this will also affect your FICO score. Try to keep them between 25% and 50% of your available credit, so you can be considered a responsible borrower. Also, do not consider transferring all your accounts into one, this will not raise your score, instead opt to pay each individually. TIP: You can obtain a great FICO score if are able to manage mixed credit at once. For example, auto loans, mortgage, and personal loans.

There are three major credit-reporting agencies-Equifax , Experian and TransUnion that can provide you with a detailed report, including your FICO score. Each of these companies have their own information, so it’s recommended that you obtain a financial report from each of these. It is also highly recommended that you obtain a report once a year to identify any potential errors that can cause any future problems.

Try to keep tabs on your score, because if you have a low score, there are steps you can take to improve it and thereby get better credit offers .

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