What is a FICO score?

FICO, we hear it all the time. We have been trained to believe this the most important number of our existence.
Insurance companies use it to factor our rates, banks and lending institutions use it to factor the interest rate we pay on loans, landlords check it as an indicator of past debt repayment patterns, employers are even using it to screen job applicants!

The FICO score was created by the Fair Isaac Corporation and the exact formula is a well kept secret.
It has become the greatest factor in determining these things for the wrong reasons. Consider what actually makes up the FICO score, it is based upon your debt, past and present and your history of making payments on that debt;

35% of the score is your payment history
30% of the score is based on the ratio of the amount you currently owe to the amount of credit (potential debt) you have available to you. The lower your ratio, the better your score.
15% of the score is based on the length of your debt history. Also based upon the average length of time your current accounts have been open and available.
10% of the score is based on new credit (potential debt) applied for
10% of the score is based on the type of debts, a mix of credit cards, store credit, installment debt, etc. More variety will increase your score.

Consider why we feel we need a great FICO score, it is to apply for more debt. The biggest reason seems to secure an affordable rate on a note to buy a house.
It is suggested to locate and work with a mortgage rep who uses a company to do actual underwriting, not underwriting based solely or mostly on your FICO score. That is the best way to secure an affordable rate based upon your excellent history of credit responsibility and keeping yourself out of debt.