Your lender rattles off the term as if everyone knew exactly what FICO meant. But most of us don’t even know what the letters stand for.The first part is simple: The Fair Isaac Corporation. Sounds mysterious, doesn’t it? What the heck is a Fair Isaac? Nothing. It just happens to be the names of the men who started the company.In 1956, engineer Bill fair and Mathematician Earl Isaac joined forces to create what was originally a consulting and decision management service. Then in 1981 they devised a system for scoring the amount of risk associated with making certain loans and investments, and the FICO score was born.The score is generated by statistically analyzing an individual’s credit history. Among other things, this scoring system takes into account:0 Bill paying history0 Debt to income ratio0 Debt to available credit ratio0 Length of time a person has had and used credit0 Existence of bank accounts0 Number of recent credit inquiriesEach factor in your financial makeup is given a “weight” toward your final score, which is a calculated risk factor, based on the past performance of others whose financial history is similar to yours. Through this score, lenders are shown the statistical likelihood that […]

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