<p>Understanding Your FICO® Score
© 2013 Fair Isaac Corporation. All rights reserved.
1
August 2013
Understanding Your FICO® Score
Understanding Your FICO® Score
© 2013-2014 Fair Isaac Corporation. All rights reserved.
i
Table of Contents
Introduction to Credit Scoring
1
What’s in Your Credit Report
1
Checking Your Credit Report for Errors
3
FICO® Score Basics
5
Overview of FICO® Score
5
What is a FICO® Score?
5
Applying for Credit
6
How the FICO® Score Helps You
6
How the FICO® Score Works
8
What’s in Your FICO® Score: The 5 Key Ingredients
8
What the FICO® Score Ignores
11
Tips for Responsible Financial Health Management
12
Pay on Time…
12
Manage Your Accounts…
12
When Seeking New Credit…
13
Monitoring Your Score is Important
13
Credit Inquiries and Their Effect on Your FICO® Score
14
What is an “Inquiry”?
14
How do They Affect My FICO® Score?
14
Minimizing the Impact of Inquiries on the Score
15
Myths Concerning FICO® Score
16
Myth: My FICO® Score Determines Whether or Not I Get Credit
16
Myth: A Poor FICO® Score will Haunt Me Forever
16
Myth: My FICO® Score Will Drop if I Apply for New Credit
16
Myth: Credit Scoring Is Unfair to Minorities
16
Myth: Credit Scoring Infringes on My Privacy
16
Glossary of Credit Terms
17
Understanding Your FICO® Score
© 2013-2014 Fair Isaac Corporation. All rights reserved.
1
Introduction to Credit Scoring
When you apply for credit – such as a credit card, auto loan or mortgage – the company
from which you are seeking credit checks your credit report from one or more of the three
major consumer reporting agencies. In addition to your credit report, they will most likely
use a credit score such as the FICO® Score in their evaluation of risk before lending their
money to you. There is more than one type of credit score, but the score used 90% of the
time in lending decisions is the FICO® Score.
Each lender has its own process and policies for making decisions when revi