A FICO score is sometimes referred to as a FICA credit score. FICA is actually the term used to shorten the Federal Insurance Contributions Act. However, searching the Internet for FICA score information will still return results about FICO scores. These are the numbers reporting agencies use to measure an individual's creditworthiness. The numbers are attached to each individual's credit history. When a possible lender requests credit information for an applicant, they take the credit score into consideration. Most lenders formulate their lending criteria based on credit scores. Applicants who fall below a specific threshold are subject to higher interest rates. In some cases, applicants may be denied financing for a poor score number.
There is a complex method used to calculate a FICA credit score. Payment history comprises 35% of the number. Behind that is the current amount of debts owed, which comprises 30%. Length of credit history consumes 15% of the total, while new credit and types of credit each receive a 10% consideration toward the total. Each reporting agency uses only the data available to them. Since each agency may receive different or incomplete information, the scores they report often differ. In order to qualify for a loan, individuals usually need to have a score above 600. Scores over 720 qualify people for the best interest rates.
The payment history considered in a FICA credit score includes all late and on-time payments. Paying all bills on time for a year will improve low scores. While some debt isn't a bad thing, the current amounts owed can't exceed a lender's monthly minimum requirement for loan payments. Each lender's minimum is also based on the applicant's income. This is especially important for mortgages. Length of credit history gives possible lenders a better idea of an individual's spending and credit patterns. New credit may be a disadvantage for individuals who already have debt. Believe it or not, types of credit accounts play an important role in scores. Having only credit cards is negative, while having credit cards, installment loans and a mortgage is actually more beneficial.
Finding an individual FICA credit score isn't difficult. The official Internet site that provides a free annual credit report copy is AnnualCreditReport.com. Many other sites also offer free reports. However, they usually charge a monthly fee for credit monitoring. In addition to this, they don't provide credit scores for free. Individuals who request an annual report from AnnualCreditReport.com also have the option to receive their FICA credit score in the mail.