FICO SCORES are mysterious three digit numbers that determine if you will get a loan or not, and at what interest rate and terms Today credit scores are the most vital numbers but are least understood. Fico scores were developed by Fair Isaac company and are models of a borrower's risk profile for the lending industry.

Each of the three major credit bureaus are licensed by Fair Isaac to run individual credit data through its proprietary statistical models. They use their own version of names for e.g. Beacon uses Equifax, Empirica is Trans Union,and Experian is Fair Isaac model. Fico scores range from 400 to 800 and are graded by lending industry as given below

• Derogatory Information :Most recent two year information is weighted higher than information a few years older like late payments,charge-off's, bankruptcy, repossession etc.
• Outstanding accounts :The larger the total outstanding debt the higher the risk and lower the scores. Reducing account balances reduces these scores.
• Credit history legend :The longer the credit history is established and the number of accounts are established the better the scores, versus a new credit profile and recently opened accounts.
• Use of credit :The lesser the use of credit the better the scores for example fewer inquiries keep the Fico scores low since frequent credit usage is considered risky in Fair Isaac models.