Maintaining Your Fair Isaacs Score

If you have applied for any kind of credit, you've probably heard references made to your fair isaacs credit score.
 
This is a reference to a credit score developed by the publicly traded Fair Isaac Corporation, which was founded in 1956 by engineer Bill Fair and mathematician Earl Isaac. Fair Isaac was founded to provide business consulting services and enterprise decision management systems. To this end Fair and Isaac developed the FICO scores, otherwise called the fair isaacs credit score, which uses dense statistical calculations to arrive at a numerical representation of a person's probable credit worthiness.
 
The FICO score is the leading mathematical calculation of an individual's probable credit worthiness used in the world. The higher the score, the greater the chances of getting a loan and a lower interest rate on that loan. A desirable score is anything above 619. The highest possible score in theory is 850.
 
According to Investopedia, "Using mathematical models the [fair isaacs credit score] takes into account various factors in each of these five areas: payment history, current level of indebtedness, types of credit used, and length of credit history and new credit in determining credit risk."
 
The reason why the fair isaacs credit score system takes payment history into account is probably obvious. The more faithful and dependable you've been in making timely payments on your debts, the greater chance that you'll continue to be that way for a new lender or new line of credit, which reduces the lender's risk of losing their money by making a loan to someone who can't or won't repay. While 97% of all Americans are paying their debt bills on time, that 3% which isn't is a rotating 3%; that is, people who are in the 97% bracket this year might well end up trading places with the 3% next year. As a result, banks and lenders want to see personal debt responsibility on a consistent basis. This is also why length of credit history is so important.
 
Current level of indebtedness is a factor for the obvious reason that if a person has too much debt vs. his income level he will eventually not be able to handle it and begin failing to make timely payments. It's also known to lenders that the more debt a person takes on, all other things being equal, the more difficult time he's already having; this makes them more leery of lending him money. This is also why new lines of credit are taken into consideration.
 
Types of credit used can reveal how well a person does with handling his own finances. More responsibility here is seen to indicate a greater level of responsibility with debt. It's also a way of being fair to people who may have to constantly take on debt as part of their profession, such as business owners. People who use their credit cards for every purchase will find their score lowered.
 
According to the Fair Isaac corporate website, "In partnership with US credit reporting agencies, we provide the only services that give consumers access to their FICO scores from all three main US credit reporting agencies."  These are the agencies that lenders pay to access your credit report. By law, when your report is pulled you are allowed to view it for yourself, too. If you see any errors it is important to contact the agency and get the error fixed so that your credit score goes back up.
 
So, to maintain a strong fair isaacs credit score and keep up your financial health, you will want to pay down your debts on time and pay them off as quickly as you possibly can afford to. Also, only seek or use credit when it is absolutely necessary; you should pay for everything you buy with your own money whenever this is feasible. If you are having debt payment trouble, seek out a debt consolidation or a debt management program right away.