What is a Fico score?
FICO stands for Fair, Isaac & Co. Who? Fair Isaac and & Co. is the firm that developed the scoring method that will determine the likelihood of credit users paying their bills. This method has become the widely accepted means of credit evaluation by lenders since the late 1950s. The reason this single score is so useful is that it attempts to condense a borrower's entire credit history into a number. Although the Federal Trade Commission has ruled that the credit bureaus and Fair, Isaac & Co. do not have to reveal exactly how the score is computed, the score is calculated through mathematical tables and scoring models based on millions of studies of credit histories. These models assign points for different pieces of information which best predict future credit performance.

There are three credit bureaus, and therefore each person has three FICO scores. These bureaus are Experian, Trans Union and Equifax. Lenders use these score to determine whether they should open a line of credit to a borrower. Some lenders may use only one of these three scores, and other lenders will use the middle score.

Some of the factors that affect a credit score are:

• Length of time at permanent residence
• Employment history
• Length of time credit has been established
• Amount of credit used out of available credit
• Amount of credit used out of available credit
• Late payments
• Bankruptcies, charge-offs, collections and other negative information

Be Aware of Errors on your report:
It is important to see your credit reports and notify the appropriate credit bureau. Each bureau has procedures to correct information. Another option to consider is having your mortgage company help you correct this problem.

• Equifax: 1-800-685-1111
• Trans Union: 1-800-916-8800
• Experian: 1-888-397-3742

How to increase your score:
There is no way to increase your score quickly, and the best way is to establish responsible credit practices over time.

• Pay bills on time.
• Do not apply for credit frequently. Although a few inquiries do not hurt your score significantly, many inquiries do.
• Reduce balances on your credit cards. Being maxed out or having a majority of the credit used will worsen your credit.
• Obtain more credit if you have very little. If you do not have sufficient credit, this can negatively impact your score.