Fleshing out credit score components

For a score to be calculated, you need to have at least one account open and reporting for a period of time. In this category, the Vantage people have the current edge. They require that you have only one account open for at least 3 months, and that account must have been updated in the last 12 months. FICO requires you to have an account open (and updated) for at least six months.

Although having no credit history makes it difficult for you to get credit initially, you’ll find it a lot easier to build credit for the first time than to repair a bad credit history (which is like being down two runs in a ballgame and trying to catch up). In this section, we give you the skinny on both main types of scores. The most widely used of these credit scores is the FICO score. Until recently, the proprietary formula for FICO scores was a well-guarded secret.

Creditors were concerned that if you knew the formula, you may be tempted to manipulate the information to distort the outcome in your favor. Well, that may or may not be the case, but if creditors are looking for good behavior on your part, it only makes sense to tell you what constitutes good behavior. In 2001, Fair Isaac agreed with us, with a little help from some regulators, and disclosed the factors and weightings used to determine your credit score.