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The PFC’s Corner – September

How Important Is Your FICO Score?

We are all inundated with commercial claims about “free credit scores” and credit offerings.  “What’s in Your Wallet?” has just about run its course with me, how about you?  This month’s article will be about the true FICO score, acknowledging many other financial sources, credit card companies, etc., offer their own version of a “score”.  While it’s true that FICO isn’t your only credit score, the others are generally just good estimates of your true score and many times come with a retail business offering.  The FICO score is the most reliable and widely used credit score in lending decisions.

The Fair, Isaac and Company developed this measure more than 50 years ago to evaluate the dependability of potential borrowers paying their obligations as agreed in order to help lenders minimize loans that defaulted.  The calculations that go into a FICO score are too complex for the purposes of this article, but it’s pretty common knowledge that your payment history (35%), level of debt (30%), length of credit history (15%) mix of debt types (10%) and new debt (10%) are the main factors.  Did you know that there are now nine (9) different FICO calculations depending on the type of loan/purpose you are requesting?

Credit worthiness can affect your financial life in many ways:  loan rates and terms; leasing terms on personal property; rental/housing availability and even job applications in some cases.  The highest FICO score is 850, anything in the 700s is desirable and if your score is not where you want it to be don’t hesitate to call/email me to set an appointment so I can give you some strategies to improve your score!  As your wing’s personal financial counselor, in one appointment I can get you all three FICO scores FREE from the credit agencies.  Coupled with free credit reports from the same agencies, we can determine if/where any problems exist.  This process will also help assure against potential identity theft, so give me a call!

Have a great September!

Randy Gerard, 816-236-3659, pfc.rosecrans.ang@zeiders.com.