Dallas SWE hosted credit expert Eddie Johansson from Credit Security Group on October 13, 2022, for a talk on how FICO scores really work. The event began with a 30-minute dinner and networking session. Eddie then began his presentation with a quick introduction and explained the history of Fair, Isaac, and Company (FICO) first introduced in 1989 used by the majority of banks, and credit grantors. FICO is based on consumer credit files of the three national credit bureaus: Experian, Equifax, and TransUnion which depending on which bureau provides the information to FICO the generated score may differ. Eddie then reviewed the different types of FICO credit score; FICO Score 8 commonly provided through your credit card accounts, FICO Score 5, FICO Score 4, FICO Score 2 commonly used in mortgage lending and various FICO Auto Scores used for auto lending. And reviewed the FICO score scale below and provided examples for us to vote on which scenario will provide a higher FICO score.
FICO Score Scales
300-560 Bad
560-660 Not Good
660-725 Good
725-760 Very Good
760-850 Great
At the end of the presentation Eddie reviewed best practices and myth busters ie. opening new accounts lower your scores and keeping an 8% or less credit utilization on each credit card (not 20% usage averaging all credit accounts).
