This is the Short & Skinny, Long & Short and Quick & Dirty to understanding your Credit/FICO scores.

The Who:
The big three repositories that keep track of your credit ratings are:

• Experian
• TransUnion
• Equifax

Your FICO can range from 200 to 900. According to this model, the higher your score, the less likely you are to default on your loan. FICO is a mathematical model created by the Experian credit bureau as a tool for lenders to use in evaluating the risk associated with lending you money. FICO stands for Fair Isaac Company, the company that created the original scoring model.

What makes up your FICO score?
There are 5 factors that make up your credit score.

Re-Scoring/Recasting:
Every 30-50 days your FICO score is recast by the credit bureau

Factor #1) Payment History = 35%
This makes up 35% of your score. Activities such as late payments & charge offs.

Factor #2) Outstanding Debt = 30%

• Credit Card over 50% of their credit limit is a double hit towards your score.
• Keep all your cards under 30% of their credit limit.
• Do not consolidate all your debt on to one cards. This is not good. It is better to spread across  all cards not to exceed 30% on each card.
• Do not close cards. Each card has a history, when you close a card you loose the history.

Factor #3) Length of Credit History = 15%

• How long you have had credit.
• How have you used it.

Factor #4) Mix of Credit = 10%
The follow is a good mix of credit.

• Mortgage
• Car loan/s
• Major credit cards such as VISA, MasterCard, AMEX, Discover
• Department stores

Factor #5) Inquires = 5%
There are two types of inquires.

• Soft inquire:
•  This type of inquire do not affect your score.
  • Credit pulled by current creditors.
  • You pulling your own credit. Important to note is to not pull it from your company if you work for a company that provides credit to consumers as it will effect your score.
• Hard Inquire:
  This type of inquire does affect your score.
  • Creditors pulling your credit to give you credit.
  • Note: When shopping for a car or a mortgage you have a 14 day window. The repositories recognize your shopping and you will only get 1 hit for all inquires during this periode.

Common misconceptions:

Misconceptions #1) Closing credit cards:

If you are going to close credit cards remember that the history goes away also. If you are going to close any cards close the most recent one/s.

Misconceptions #2) Collections:

• Demand a full report on any collections. There are fraudulant collection companies out there. Make sure the collection is yours. This is called a "Validation of Debt Owed" request this from all accounts maked as a collection.
• DO NOT PAY OFF COLLECTIONS WITHOUT A LETTER OF DELETION!
• When paying off a debt request a letter of deletion, do not pay it off with out this letter. With out it you could pay it and the collection remain on your report.
• Paying off collections before closing on a mortgage. Consult your loan officer before doing this.

Misconceptions #3) Stop using credit cards:

• This is not a good idea.
• Use them with love and care.