Brush Up on FICO Math

Michael Sheehan

Physician's Money Digest, March31 2005, Volume 12, Issue 6

Your credit score, known as a FICOnumber, is the basic tool lenders use whendeciding what interest rate to charge you.The higher your FICO score, the lower therate you're likely to get. The two biggestfactors used to calculate your FICO numberare your payment history and theamount you owe, so if you've had a historyof late payments or are near the max onyour plastic, you may not be able to domuch to raise your score. But if your credithistory is pretty good, one way to keepit healthy is by not consolidating debt ona single card to get a lower interest rate.Doing that raises your credit utilization(ie, the amount you owe as a percentageof your credit limit), which is a key factorin determining your score. For more information,visit www.myfico.com.