Firstly, there is not such thing as a FICA score. Many people misspell and mix up FICA and FICO. Although FICA is a real and somehow related abbreviation for Federal Insurance Contribution Act, it has nothing to do with credit scores and FICO. On the other hand, FICO is the abbreviation for Fair, Isaac and Company, the company that first started the credit score used to evaluate a loan borrower's credit worthiness.

Having a good FICO credit score grants you easy approval for credit cards and guaranteed unsecured loans. Given the importance for credit in today's society, any failure to understand the basis for maintaining a high FICO credit score can be disastrous on your future lifestyle and purchasing options. It is a million times easier to maintain a good FIOC score than trying to repair a poor FICO score even if you hire a credit repair lawyer.

The FICO score is a numerical metric computed from your past financial history such as borrowing patterns, credit card bill payment regularity etc. Creditors will use the FICO credit score to decide whether you are the type of low risk, valued customers that will duly repay loans on time and become a loan defaulter adding to their already problematic bad debts accounts. The FICO (and not FICA) credit score range between 500 to 850 where the higher the better and can be categorized into the following:

720-850 - the ideal credit score
700-719 – access to favorable financing terms
675-699 - standard FICO credit
620-674 – access to financing with additional terms
560-619 – very limited financing options
500-559 – try to repair your bad credit score as soon as possible

The FICO credit score is computed from 5 different personal financial history (2 primary and 3 secondary) aspects with varying weightage of importance. These are given below:

Loan Repayment History – 35%
Total Owed Amounts – 30%
Loan Repayment Length – 15%
New Credit – 10%
Types of Credit Used – 10%

The two primary credit history details regarding payment history and total owed amounts contains to more than half of the total percentage. This two are the most crucial determinant of your final FICO score and it is important to pay more attention to them when trying to improve your credit standing. Loan repayment history encompasses all information on your spending, loan and repayment patterns on credit cards, hire purchase installments, home mortgages, personal loans accounts etc. If you have been making regular payments to your debts and loans, you will win points on this aspect. If you have file bankruptcy previously and defaulted on debt repayments, you will score very badly here and at 35% of the overall FICO score, that is why people with any form of bankruptcy will have a low FICO credit standing. The next consideration at 30% of your FICO score is the total amount of debts owed and the amount outstanding. This score will improve as you regularly repay your debts and reduce the amount outstanding. Naturally, if you still owe many creditors a lot of money, you will not have an ideal FICO credit. The loan repayment length (15%) is concerned over when your loan accounts were created and how long they are expected to last. New credit (10%) simply shows the number of recently opened loan accounts and the types of credit used (10%) is an overview factor on your usual sources of financing used so far such as secured debt consolidation loans. The other critical information included in your credit report is your employment information. Although this is not used to compute your FICO score, many banks and loan companies definitely use your employment record to aid their decision in whether to approve your loan application or not.

The three major credit-reporting agencies (TransUnion, Experian, Equifax) tracks your credit information separately. These three reports tend to be slightly different and are used to derive the so-called tri-merge credit report used by all banks and loan providers on the eligibility of consumers to apply for mortgages. If you are wondering why there is a need for three separate credit bureaus, that is because credit reporting are prone to mistakes and the chances of all three reports showing an erroneous entry is considerably reduced. Even so, it is still suggested you review your credit reports from TransUnion, Experian, and Equifax every year using the free entitlement granted by the US laws. This gives you the chance to monitor and correct any errors in your FICO scores. For example, when you are in the midst of repairing your credit in order to qualify for a particular low interest mortgage loan, frequently checking your credit reports will help you to immediately get that loan the moment your FICO score crosses the 700 mark.

Maintaining a higher than 700 FICO score will allow you to have access to very favorable mortgage loans, which means savings of over tens of thousand dollars over big purchase items such as houses and cars. If you only have access to loaded mortgage loans with higher interest rates to offset your poor FICO credit worthiness, taking on any long term longs will be a painful decision. It may be cheaper in the long run to quickly repair your FICO credit score before applying for loans even if it brings hiring a credit repair lawyer. Similarly, you should regularly monitor your FICO score since it is a dynamic metric that creditors used to evaluate your future financial trustworthiness.