Every time I go to my local credit union or bank for a loan, I get turned down. Something about my “credit score” (FICA) being too low. There are 3 credit reporting firms (Equifax, Experian, and TransUnion) and each calculates my FICA differently. What the hell?
I have yet to find someone tell me exactly how the algorithm (mathematical model) works to calculate my FICA. FICA is mystical. Information about my credit habits get dumped into this black box and out comes a number that determines whether I am credit worthy or not. It is akin to pulling the lever on a slot machine to see if you “win credit or not”. The closest I can come to understanding FICA is ….
35% is based on payment history (I’m not exactly sure how this works).
15% is based on credit history (apparently different from payment history).
30% is based on how close you are to maxxing out your “approved credit”.
10% is based on your ability to manage different types of credit. Huh?
10% is based on any recent applications for new credit.
And then there is adjustment for mortgage and car payments over the last 10 years.
And then there is adjustment for missed payment or defaults in the last 7 years.
And then there is a factor for recent loan applications.
I’m sure there is more but you have the major factors that go calculating you FICA score. The truth is you are at the mercy of the big computers and really do not have a clue on how much emphasis was given to each factor in your score. 500 is bad. 692 is the average score. 740-800 is preferred customers. 850 is God and Warren Buffett.
So go forth. Request your score. Become an “800” club member!
Love,
Dad