The Fair Isaac and Company score, otherwise known as the FICO score rating, is the most widely used barometer of credit. It can be a blessing or a curse for consumers, depending on who you consult. The FICO score estimator formula arrives at a three-digit number that tells the creditworthiness of a consumer based on several factors, including payment history and the ratio of debt to available credit. The FICO score rating is available through most major consumer reporting agencies.

While Fair Isaac maintains that most people score between 300 and 850 on a FICO score range, the number is a bit of a mystery in terms of average scores and score availability, as well as which version of the FICO score is used. We're in luck that there are plenty of online sources ready to lend some good advice and ratings on FICO scores.

To find out more about FICO scores, consider the following.

1. Learn as much as you can about how your financial decisions affect your FICO score.

2. Know which version of FICO is used to rate to understand factors that impact your score.

3. Understand how FICO compares to other credit numbers.

Action Steps
The best contacts and resources to help you get it done

Seek to understand FICO scores and how they're used

It may be frustrating for consumers to understand how their financial decisions affect their credit report and their credit score. For example, canceling a credit card may intuitively seem like a good way to improve credit, but it can actually negatively affect your FICO score. Luckily, there's a lot of good information that helps clear up misconceptions about FICO scores and how they are used.

I recommend: Myths About Credit Scores is a 60-second video provided by Next Advisor that helps shed some light on FICO scores. My Privacy Rights provides an in-depth discussion about FICO scores and how they are determined.

Get up-to-date information on the FICO score

The FICO Score has been periodically upgraded over the years by the Fair Isaac Company in an effort to provide a clearer picture of a person's creditworthiness. When understanding the number, it's important to know which version of FICO credit score the creditor is using to rate you.

I recommend: Spend on Life discusses the different incarnations of the FICO score over the years. Credit Scoring has a little fun with FICO scores in an attempt to show how information about the score range varies widely.

Learn ways to monitor FICO scores and repair credit

The FICO score, contrary to popular belief, is usually not free. The FACT Act, which required access to credit scores, does not apply to the FICO score, for which consumers have to pay a range of $6-$16 for access to their score.

I recommend: CNN Money explains how the FICO score is not free and also discusses the confusion created by other knock-off credit scoring numbers (affectionately called FAKOs by the industry) such as the PLUS score. They also mention the best place to get a credit score. Credit Score Cowboy gives a nice overview of how to monitor FICO credit scores.

Just as you have a personal credit score, your business has a business credit score. In fact, your business score is influenced by your personal score — and, like the personal score, helps determine loan approvals and interest rates.

The basic credit score is called a FICO score. The formula includes such information as punctuality of payment, debt capacity in use, length of credit history and types of credit used. To get your business into the best possible position, you'll need to do three things:

1. Improve the balance-to-limit ratio on outstanding credit cards and loans. Besides paying down balances, this may involve signing up for more credit — having a low balance compared to the available limit can improve a credit score.
2. Verify the accuracy of your credit information. This includes making sure that credit agency records show that any previous bad debts have been cleaned up.
3. Fix inaccuracies in your credit reports.

Action Steps
The best contacts and resources to help you get it done

Separate your business score from your personal score

An Employer Identification Number, also called an EIN or taxpayer ID number, helps to separate your business score from your personal score, which is attached to your Social Security number. Continue separating your business and personal identities by establishing separate phone numbers and checking accounts.

I recommend: Apply online for an EIN at the Internal Revenue Service Web site. Review the instructions and the form before starting.

Get your personal credit report

Lenders recognize a correlation between a business owner's personal credit history and likelihood of repaying a business loan — so be sure to check that your personal credit report is accurate. Reports may vary among reporting agencies, because each bases its score on slightly different criteria.

I recommend: Obtain a personal credit report, though not your credit score, for free once a year from each of the three major reporting agencies: Equifax, Experian and TransUnion. All three agencies also support a Web site from which you can order free copies of your reports: AnnualCreditReport.com. Buy a copy of your personal FICO score anytime at MyFico.com.

Review your business credit report

Small businesses do not have FICO scores, but lenders do consider other predictors that businesses will repay loans. So you'll want to be sure your business credit report is up to snuff.

I recommend: Order basic and comprehensive business credit reports at D&B Small Business Solutions. The Small Business Scoring Service at Fair Isaac includes a FICO score analysis, financial snapshot of your business, overall performance analysis and a score highlighting a company's payment performance.

Fix your credit to boost your score

You can correct inaccuracies and take steps to raise your score yourself, but if you prefer, you can hire help.

I recommend: Lexington Law Firm offers to delete inaccurate, misleading and unverifiable information on credit reports. BrightScore from the nonprofit credit counseling agency InCharge Institute of America Inc. provides credit analyses and score improvement plans.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Your FICO score is based on your credit information and doesn't consider your employment, income or other personal data.
• •  If an application for credit is denied as a result of the credit score, you're legally entitled to specific reasons for the denial.
• •  FICO scores range from about 300 to 850, with scores over about 700 considered to be good credit.

In order to obtain business loans or credit cards, you need to have good credit. The more you know about your FICO score and all the terms you will find in your credit report, the closer you will be to improving your credit. Being familiar with the main terms associated with a FICO score will help you understand your credit report.

Action Steps
The best contacts and resources to help you get it done

Fair Isaac and Company (FICO) score

The Fair Isaac and Company (FICO) score is a way to fairly compare credit across the nation. A high FICO score may enable you to obtain low rates on home loans or credit cards, while a low score may prevent you from getting much credit at all.

I recommend: CreditReporting.com explains FICO scores.

Credit bureau

A credit bureau is one of the companies that keeps track of your credit history and offers a score. The three main credit bureaus from which you can get your credit report and score are Experian, Equifax and TransUnion.

I recommend: A FICO Score defines a credit bureau and provides links to the three major credit bureaus.

Consumer credit file

A consumer credit file is what the credit bureaus have on record for each person with credit. It typically includes your contact information, credit history and more.

I recommend: Visit the glossary at myFICO to learn what a consumer credit file might include.

Inquiry

An inquiry occurs when a company looks at your credit report, usually to determine whether you would qualify for credit. Some companies also look at your report to gain information about you in order to direct their marketing efforts.

I recommend: CreditCards.com explains what an inquiry is when it comes to viewing your FICO score.

Revolving debt

Many people have a few lines of revolving debt on their credit report. This type of account allows you to continually spend money and then pay it off, keeping it open for years. A credit card is an example of a revolving debt account.

I recommend: Go to Credit.org to learn about many FICO terms, such as a revolving debt.

Installment debt

Installment debt is a debt or loan you will eventually pay off by making monthly payments. The most common installment debts are home loans, car loans and student loans.

I recommend: Investopedia explains installment debt.

FICO score calculation, sometimes called Fair Isaac and Company score calculation or Fair Isaac Corporation score calculation, is important for lenders and businesses that grant credit to customers for anything from furniture to braces to cell phone service. A customer's FICO score tells a business how likely they are to repay their loans and other credit obligations.

FICO is the most widely used credit score system, although there are a few other companies providing their own version of credit scores. Keep updated on who uses FICO credit scores and what new types of FICO scoring are available. Staying informed of the changing trends and news will keep your business protected from high-risk borrowers. There are a few sources that you can use to stay updated, including:

1. The Fair Isaac Corporation, now known as FICO, that created the FICO credit score.

2. News publications, online and print, that cover the credit industry and credit risk scoring systems, including FICO scores.

3. FICO score providers, such as credit bureaus, that use and sell the scores to consumers and businesses.

Action Steps
The best contacts and resources to help you get it done

Get FICO scores news and trends straight from the source

Fair Isaac Corporation (FICO) has clients in over 80 countries, and has the world's leading credit risk scoring system. Go to them directly for the latest information on the scoring process and the different versions available for different industries.

I recommend: The Fair Isaac Corporation will keep you updated on the latest FICO score rating news. The company also hosts a FICO World conference every year.

Turn to news sources for FICO credit score trends

News updates and press releases often cover FICO credit score happenings and trends. Search news websites for specific FICO trends to narrow down your news article results.

I recommend: FOX News Network routinely carries news and updates about FICO scores and the newest versions of these risk-predicting systems, such as the FICO 08 score for auto loans and bankcard lenders. The Los Angeles Times can keep you up-to-date about the latest FICO scores news and trends, including Experian's decision to stop selling scores to non-business customers.

Get news from FICO score providers

Credit bureaus often use FICO scores on their reports and credit evaluations. They can keep your business informed on FICO updates and news. Equifax and FICO joined forces to create the version of FICO scores called BEACON Mortgage Scores that is specifically for mortgage lenders.

I recommend: Check out the News Room at Equifax for updates on how to monitor FICO scores and stay on top of the latest happenings. Fair Isaac Corporation has a Credit Newswire to keep you abreast on all things FICO, along with a free FICO Score Estimator so you can keep on top of your credit changes.