The FICO score is named after Fair Isaac Corp., the company that developed and licenses the secret formula that is used almost universally to determine a person’s creditworthiness. It’s a number ranging from 300 to 850 and, although we don’t know the proprietary calculations involved, the pie chart below shows an approximate weighting of the factors that are used.
The importance of having a good score is dramatically shown in the next chart, which lists a recent national average interest rate that was charged for a 3-year automobile loan:
|FICO Score||Interest Rate|
(Source: myfico.com web site)
Improving your scoreWhile a dramatic event such as bankruptcy can cause your score to plunge, increasing your score takes time. Here are a few things you should be doing:
More tips than we have room for here can be found on the FICO web site:http://www.myfico.com/.