FICO memo

Understanding Credit: What is a FICO Score?

For years, the credit industry did not have to reveal consumers’ credit score. Credit bureaus would reveal a consumers credit rating only to a lender when the applicant wanted a loan. Consumers could not learn their scores unless credit was denied.

Now, all that has changed. Using the Internet, consumers can check their credit files and even obtain specific credit scores, which are key factors in obtaining loans, renting property, and protecting against identity theft. In certain fields of employment your credit score can mean the difference between getting a job and being denied employment.

Although the three national credit bureaus (Equifax, Experian, and TransUnion) may use different scoring systems, many lenders now mention FICO scores as the favored ranking to estimate the risk involved in an individual’s loan application.

YOUR TASK

As an intern in architect Erik Larson’s office, you must do some Internet research. Mr. Larson recently had to reject two potentially lucrative house construction jobs because the clients received low FICO scores from the credit bureaus. They could not qualify for construction loans. Mr. Larson wants you to learn exactly what “FICO” means and how this score is determined. He also wants to know how consumers can raise their FICO scores.

Go to https://ficoscore.com/
(Links to an external site.)

and study the information. If the uniform resource locator (URL) fails, use a search engine with the term “My FICO.”

Mr. Larson would also like to tell his clients about the recent changes in consumer credit laws.

Click here to identify what you think are the three most important changes affecting consumer credit.
(Links to an external site.)

Summarize your findings in your own words in a well-organized, concise, two page, double-spaced memo addressed to Erik Larson (from you). Use bulleted lists for some of the information.