| An acronym for Fair, Isaac & Company. A computer-generated credit score that predicts a lender's risk in doing business with a borrower. Any company or individual that issues mortgage loans, home-equity loans, car loans, insurance policies, or health care services (even the IRS) bases much of its lending decisions and terms on the applicant's FICO score. FlCO scores are determined by computers and released through the three credit bureaus to their subscribing members. At Experian, the scores are called Experian/Fair, Isaac; at Equifax, they are called Beacon scores; at Trans Union, they are called Empirica scores. FICO scores five main kinds of credit information. Listed from most important to least important showing the percentage of the score based on the category, the categories are: (1) payment history (approximately 35% of score); (2) amount owed (approximately 30%); (3) length of credit history (approximately 15%); (4) new credit (approximately 10%); and (5) types of credit in use (approximately 10%). Credit scores range from 300 to 850. Scores provide an extremely valuable guide to future risk based solely on credit report data. The higher the consumer's score, the lower the risk to lenders when extending new credit to a consumer. |
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