19 November 2008

What on earth is in my FICO Score anyway?

My car insurance premium just went down. It was a nominal decrease, but I'll take what I can get. I called my insurer just to make sure that it wasn't a mistake and the customer service rep chirped that my FICO had gone up and my rates dropped accordingly. I still fail to understand the connection between my credit rating and my car insurance rates, but I'm sure there's an actuary somewhere who can prove that the two things are related. And I'm equally sure that when presented with this evidence I'll dismiss it. Anyhow, the whole thing got me thinking about the FICO thing.

I know what my number is, but I still don't know what it means or how it's derived. Well, enter my pal Ben Popken and Consumerist again. He ran a story on Monday with this pie chart:

He found it on a website called MyFICO.com. Check it out.

This is from MyFICO.com:

Payment History
  • Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
  • Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
  • Severity of delinquency (how long past due)
  • Amount past due on delinquent accounts or collection items
  • Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
  • Number of past due items on file
  • Number of accounts paid as agreed

Amounts Owed
  • Amount owing on accounts
  • Amount owing on specific types of accounts
  • Lack of a specific type of balance, in some cases
  • Number of accounts with balances
  • Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
  • Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History
  • Time since accounts opened
  • Time since accounts opened, by specific type of account
  • Time since account activity

New Credit
  • Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
  • Number of recent credit inquiries
  • Time since recent account opening(s), by type of account
  • Time since credit inquiry(s)
  • Re-establishment of positive credit history following past payment problems

Types of Credit Used
  • Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)

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