FICO Score

A FICO score is a method of calculating the creditworthiness of an individual. The FICO score credit model was developed by the Fair Isaac Corporation in the late 1950's. It is a most popular credit model in United States of America (USA). A higher FICO score is considered as better credit whereas a FICO score of below 600 is considered as a poor score or credit. The lenders such as credit card providers, banks, etc analyze the FICO score for determining the credit limit and interest rates on the debts.
FICO Credit Score Calculation
A FICO score is calculated after determining the following factors:
PERCENTAGE CRITERIA
35 % History of payment. Example: late payments, bankruptcies.
30 % Current debt owned. Example: total amount of debt owned by individual.
15 % Length of credit history. Example: Duration for which the accounts have been opened.
10 % New credit. Example: application for new credit debt.
10 % Types of overall credit. Example: blend of credit cards, debit cards, retail cards, etc.

As stated earlier, a FICO score is a scoring method that is based on the financial history figures derived from the individual's credit report. If a FICO or credit scores ranges from approximately 300 to 850 then it represents the good credit scores. The scores of above 725 are considered as a score in which an individual is able to obtain most favorable financing terms. The scores that fall below 600 are considered as bad credit score and the individuals must try to improve credit score.
There are three credit reporting agencies such as Equifax, Experian and Trans Union that calculate the credit score of the individuals. Each of these credit reporting agencies maintain the credit score separately. The maintenance of credit score separately can lead to the differences in FICO score for the same individual. This is because each of these credit reporting agencies have access to the different parts of an individual's credit history. According the experts, it is better for an individual to demand for separate credit reports from each of these credit reporting agencies so that he can get a clear picture of his credit score. In most of the countries such as United States of America, Canada, etc it is mandatory for the credit bureaus to provide credit score report to the customers.

Hence, it is very much critical for an individual to observe his credit score. He must also try to repair bad credit score. If he is not able to do so then he will be a victim of a lot of problems from which it is very difficult to escape.