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Fair Isaac & Co has developed FICO as a method of calculating how credit-worthy individuals are. It represents an individual’s “pay-ability” as a number, called a credit score. The FICO score is watched closely by lenders, insurers, landlords, employers, utility companies and other creditors. It helps determine credit interest rates, credit limits and credit eligibility.

FICO score is calculated on the base of credit history. Factors like income, race and gender are not taken into consideration in the scoring process. Different factory may affect the score: Amount of available and used credit; length of payment history; recent credit inquiries, quality of payment history (charge-offs, collection accounts & bankruptcy filings). FICO score ranges from approximately 300 to 850. A person with a 300-400 FICO will hardly obtain any credit. A slightly higher score, around the 500’s, will give access to credit, but still with high interest rates and fees. Individuals with FICO above 650 will have much better chance of getting good rates and larger lines of credit.

Some tips on raising you FICO score: Paying off credit cars & bills in full each month is your #1 priority. If you are not able to pay the cards in full at least pay a little bit more than the minimum payment.Reducing your debt will also help, since it will trim down your debt-to-income ratio. Not having sufficient credit can also reflect negatively, but be careful not to open too many accounts as well - try to raise the credit limit on your oldest credit lines instead.

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