The borrower's FICO score is calculated by weighing credit information and assessing "points" for each piece of information. The information is taken from a credit bureau file and FICO scores are based on credit information only. By law, an applicant's credit worthiness cannot be judged on race, religion, marital status, gender or nationality. According to Fair Isaac, the information is, objective, consistent and does not discriminate.

FICO Scores can fluctuate, however. Depending on the credit repository the information is taken from and the geographical location of the borrower, there may be more or less information available, which leads to variations in FICO scores.

Calculation:
The borrower's FICO score is calculated based on assigned numerical values for certain credit characteristics. The higher the overall score the less risk there is for the lender.

Higher risk characteristics are…

Bankruptcy; Non-bankruptcy derogatory public records; Charge-offs or loan defaults; Repossession; Serious delinquency;

Additional characteristics that determine FICO scores are...
Number and age of trade lines; Presence of derogatory trade line information; current level of indebtedness; Types of credit available (revolving vs. installment); Amount of time credit has been in use; Credit inquiries

Weight
Credit usage is the key factor. Each characteristic is weighted according to its "predictive power." Those factors with the highest weights are collections, judgments, bankruptcies, late payments, current balances, too few or too many revolving accounts, finance company accounts, number of accounts opened in the past 12 months, collections and number of credit inquiries made. FICO Scoring looks at credit patterns over a period of time. In other words, one late payment will not ruin your credit score. However, a history of late payments and high credit balances will have a serious effect on an individual's FICO score.

Errors:
Errors on credit reports occur for many reasons. In the case of a divorce, your buyer's credit may be impacted if the spouse does not maintain payments, even if the court made the spouse responsible for the outstanding debt. If your buyer has a bankruptcy that was discharged, there may be outstanding charge-offs or unpaid collections on the report that in fact were discharged through the bankruptcy. Buyers are encouraged to check their credit reports at least one per year. If a buyer feels there are errors contained in their credit report, they should contact the credit bureau. According to the Fair Credit Reporting Act, borrowers may fill out credit dispute forms and file them with the credit bureau for investigation. They may do so by contacting the appropriate credit repository.