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FICO Scoring
What is FICO? FICO is a mathematical model created by the Experian credit bureau as a tool for lenders to use in evaluating the risk associated with lending you money. FICO stands for Fair Isaac Company, the company that created the original scoring model. Similar models have been programmed by the other credit bureaus but they are all referred to as FICO scoring.
How is my score calculated? Your score is calculated by a series of questions based on both your credit report and debt-to-income-ratio. Each answer accumulates a certain number of points that are then added together for your final score. A typical scoring considers:
- How long you have lived at your current address
- Your job or profession
- Your financial obligations (debt-to-income-ratio)
- Any late payments
- The amount of credit you have outstanding
- The amount of credit you are using
- The amount of time you have had credit established
Most weighted factors: Current balances on accounts, too few bank revolving accounts, too many bank revolving accounts, number of accounts with balances, number of accounts opened in the last 12 months, length of time accounts have been established, amount of past due accounts, number of delinquent accounts, too few accounts rated "current", recent derogatory public record of collection, past due balances, number of credit inquiries made.
What is considered a good score? The magic FICO number is 620. If you score below 620 you are considered to have a very high default risk, giving you the possibility of being declined. If you score between 620 and 650 you will be put into a "questionable" category where you will have to provide further documentation to get approved. A score of 650 or above is considered golden or "cream of the crop', and most likely you will be eligible for the best rate on your loan.
| Quality Grade |
Credit Score |
Debt Ratio |
Max
LTV
Ratio |
Credit Type |
Delinquencies |
Typical Additional
Requirements |
| # of Times |
# of Days |
Within Last |
| A+ to A |
670+
660 |
28/38 |
to 95% |
Mortgage |
0 |
- |
24 mo |
Good/excellent during last 2-5 years |
Installment
Revolving |
0-1
0-1 |
30
60 |
12 to 24 mo |
No bankruptcy within the last 2-10 years |
| B+ to B- |
620 |
50 |
75-85 |
Mortgage |
2-3 |
30 |
12 mo |
No 60 day mortgage lates. 24-48 mos
since bankruptcy discharge. Higher number of rolling lates may be allowed |
| Installment Revolving |
2-4
0-2 |
30
30 |
12 mo
12 mo |
| C+ to C- |
580 |
55 |
75 |
Mortgage |
3-4
0-2 |
30
60 |
12 mo
12 mo |
12-24 mos since bankruptcy
discharge. High rolling lates allowable. |
| Installment Revolving |
4-6
2-4 |
30
60 |
12 mo
12 mo |
| D+ to D- |
550 |
60 |
65-75 |
Mortgage |
2-6
1-2 |
60
60 |
12 mo
12 mo |
Bankruptcy discharge within last 12
months. |
| Installment Revolving |
Poor payment record with limited 90
day, isolated 120 day lates. |
| E |
520- |
65 |
50-65 |
Mortgage |
Poor payment record
with a pattern of 30, 60 and 90+ lates. |
Possible current bankruptcy
foreclosure. Stable current employment. |
| Installment Revolving |
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