The Fair Isaac Corporation (founded in 1956 as Fair Isaac by engineer Bill Fair and mathematician Earl Isaac), known as FICO, created the first credit scoring system in 1958, for American Investments. They created the first credit scoring system for a bank credit card in 1970. FICO is based in Minneapolis, Minnesota, United States. The company has offices in North America, South America, Europe, Australia and Asia.

Your credit score is calculated from factors such as the amount of your current debts as compared to your overall credit. It also takes into account your past history of bill paying, how long you’ve been using credit, the types of credit you have used, and even the number of inquiries about your credit.

In essence, credit scoring is a bunch of math, since the process of calculating your credit score is done automatically.

Credit scores typically range from 300-850 for consumers in the United States.

Credit scoring systems are integrated into the lending process to standardize the way lenders determine how likely a debtor will be in terms of repaying a loan.

In the world of credit scores, bigger numbers are better and reflect a higher probability that you loan will be repaid on time.

When creditors file late payment reports about you, or difficulties collecting payments from you, your credit score goes down. Furthermore, when judgments and collection agency activity is reported, your score decreases even more.

Ultimately, continued delinquencies and negative filings about your record history can result in a negative credit rating or adverse credit history, which will mean you may not be granted a loan at all, or, you may have to pay high interest rates to obtain a loan.

Since your credit score is all about payment history, amount owed, length of credit history, etc., you want to keep that all in good standing.

5 Ways To Improve Your Credit Score:

1. Make timely payments: A 30-day late payment may reduce your credit score by 50 points. Your account may be sent to collection due to repeated late/missed payments.

Even if an account is in collection, pay it off and have the status updated on your credit report as “pay for delete” or “paid collection” after negotiating with the creditor.

For some people, setting up an auto bill payment through your bank account is a simple way to make timely payments.

2. Pay off debt instead of moving it around: It’s better to pay off debt rather than move it from account to another. This is because when you owe the same amount of debt but have fewer accounts open, it lowers your score further. Maintain low balances (around 10% of the available credit) on your credit cards and revolving accounts.

3. Establishing new credit: Try to shop for new credit and loans within a short period of time. Usually, for mortgage and auto loans, all credit inquiries made within a 30-day period are treated as one inquiry. So, the sooner you complete shopping for new credit, the better it is for your score.

4. Authorized users: When you add an authorized user to your credit card account, make sure that the user doesn’t overspend. Being the principal card holder, you’ll have to make the payments and in case you can’t afford it, your credit score would get the hit along with that of the authorized user.

5. Avoid store cards and small debts: Getting too many store cards isn’t a good move if you’re going for credit score repair. Such cards are open lines of credit and too many of them are considered as risky by credit bureaus, especially if these are not affiliated to a national creditor (such as MasterCard, VISA etc).

Here is the free service:
AnnualCreditReport.com

AnnualCreditReport.com was created by the three nationwide consumer credit reporting companies – Equifax, Experian and TransUnion – and offers consumers a convenient way to request, view and print their credit reports in a secure Internet environment. They also provide options to request reports by telephone and by mail.

Note: If you wish to dispute an item on your credit report pulled using their free system, the credit bureaus, under the Fair Credit Reporting Act (FCRA), have 45 days to investigate your inquiry.

♦ Payment History: No surprise here. If you have a record of making payments on time, you already know this is a good thing. But if your record shows delinquent payments your credit rating will go down.

♦ Risk/Longevity: If you’ve been at a job and in your home for longer than 2 years (the longer the better), lenders view this as a sign of stability and lower risk.

♦ Risk and Debt Control: Lending more money to someone who is living beyond their means is considered a higher risk than lending to someone who has their debt under control. One rule of thumb for non-mortgage credit payments each month is that the payments should not exceed more than 15 percent of the borrower’s after-tax income.

♦ Risk and Balance Limits: The old adage that “It’s easier to get a loan when you don’t need it” is reflected here. The closer your credit cards are to their maximums the greater risk associated in your credit score.

These are not all the factors that are reflected in your credit score but they are among the ones that would have the most awareness of and can exert the greatest control over.

THE BEST WAY TO MAKE SOMEONE WORRY is to give them an idea and then convince them to believe it. You see this everywhere.  For instance, when gas prices when rocketing up, the news media (oil companies using the news media) convinced everyone that there was a shortage in oil, so the prices needed to go up.

How crazy is that?  In the end, it was realized that we have plenty of oil (especially when we saw the oil company profits also rocket straight up) and that the oil companies just “invented” the problem.

CREDIT SCORE AND YOUR DEBT

Credit scores are the same thing.  100 years ago, credit was the word of the person and whether or not they kept their word.  That seemed reasonable.

Now, your credit is a complex scoring system that shows if you are a “good” or “bad” person.  Can you be trusted!

Wait a minute!  Does that mean you are now your credit score? Well, the advertisements are trying to get you to believe that you really are your credit score!

And there’s an idea that can trap a person!

In truth, there are very, very few people that are not worthy of credit.  In economic times like these, there are a number of factors that can cause a person to suddenly get bad credit.  Loss of job, lowered pay, medical problems, divorce, separation, etc. can all account for a person’s inability to be able to pay their credit cards.

Does that mean they are a “bad” person?

Hell no!  It means they have run into problems and need to action to get out of the problem.

Building credit back up can be done and the road to it is not that long.

Why?

Just remember, your creditors are very interested in you being in debt!  That’s how they make their money!