Wednesday, June 24, 2009

Know how FICO scores are calculated: watch that "mix of accounts"

AOL today provided a “wallet pop” column on how your credit score is computed, by Janene Mascarella. I thought I would provide it on this blog, since id theft has often compromised credit reports and credit scores. The article is titled: “Are you clueless about credit scores? What you need to know.” The most interesting item for me was “mix of accounts”. The article reads “Ideally, the credit bureaus like to see a mortgage, an auto loan, and three to five credit cards.” I don’t have a mortgage or auto loan, although I could have either or both (particularly the latter) in the foreseeable future. (Yup, I ought to go Oprah and drive a hybrid.) In 1979, I did not get approved for a particular credit card (National Car Rental) partly because of "lack of home ownership." That soon changed.

I worked for Chilton in the 1980s, as a mainframe computer programmer-analyst. Chilton is an ancestor of Experian and at the time I worked tangentially on “risk predictor” which was the feed to Fair Isaacs.

The link for the article is here.

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