 |
Fair Isaac Corporation Credit or FICO Score
As I am not from the US, I had no idea what FICO meant before
researching it. FICO stands for Fair Isaac Corporation, a company
based in California. FICO, put simply, is a person's credit
score. A credit score can be used by a potential lender in making
a judgement on whether to grant you credit or not, for example
when you apply for a new credit card or home mortgage. Therefore,
if you are in the US, the FICO score is very important to you.
What Does a FICO Score Do?
A FICO score places a value on the types of credit accounts
you hold or have held, and your credit history in maintaining
those accounts. The FICO score scale ranges from 300 to 850, with
the majority of people in the United States in the 600 - 850
range.
Factors Which Affect Your FICO Credit Score
There are 5 factors in all which determine your FICO credit
score:
1. Your payment history.
This counts for a very significant 35%--the most of the FICO
score factors. As you would expect, paying your bills on time is
gets you a good score, while paying them late on a consistent
basis is will mark down your FICO score. If you have had debts
referred to a collection agency, that is worse still, while
declaring bankruptcy is the worst of all.
2. How much you owe.
Another obvious factor that FICO will take into account in
arriving at a credit score. This accounts for another 30% of your
total FICO score. It is not just what you owe already that
affects your FICO score. Also taken into account is the amount of
credit available to you. For example, if you have a credit line
of $5000, but have so far only used $1000, that will be taken
into account.
Your total amount of credit will be totalled, and compared to
your annual income. So, loans such as car loans, mortgages,
credit cards, store cards, will all be added together. Those who
use most or all of their available credit will get a lower rating
for this part of the FICO score calculation.
3. Length of credit history.
Another important factor that makes up 15% of your FICO credit
score is the length of your credit history. The longer your
credit history, the better for your FICO score. Additionally,
though, a long history with any particular lender will be good
for your credit score.
4. Type of credit mix.
The fourth factor taken into consideration is the type of
credit mix that you have. For example, do you have only high risk
unsecured type credit, or do you also have some solid secured
loans such as a home mortgags? Those consumers who have a mix of
credit have higher a FICO score. This fourth factor just counts
for 10% of the total FICO score.
5. Number of new credit applications.
The last factor in the FICO rating is the amount of new
applications that you fill out. If you have recently filled out a
lot of credit applications, this will hurt your score because it
puts lenders "on alert" that something may be wrong. This part of
the score is worth 10%.
Lenders themselves will normally look at employment, income,
length at current residence, and marital status, but these do not
affect your FICO score. If you intend to borrow in the future,
you do need to pay attention to your FICO score. If your FICO
score is low, this could lead to higher interest rates, extra
mortgage insurance when buying a home, and in some cases denial
of the loan.
If you plan to take out a major loan, such as a home mortgage,
it could be a wise move to get a copy of your credit report 6
months before you plan to apply. That will give you time to look
over your history, to ensure there are no discrepancies. If you
find inaccuracies, contact the Credit Reporting Agency in
writing. They will have 30 days to investigate it, and then
correct it if they find your claims are true. You may also want
to ask for a revised credit report; they are required by law to
supply you with one if an inaccuracy is found and corrected.
This article about FICO
was written by Roy Thomsitt, owner of the Eliminate Credit Card
Debt Now website.
MORE RESOURCES:
Credit - Google News
|
|
|
RELATED ARTICLES
Credit
Suicide
Few things influence the home buying process more than your
credit. I like how Clark Howard refers to the three credit
repositories as, "the three screw-ups".
Credit Damage: Getting
Compensated for Your Loss
Until recently lawyers for victims of credit damage had
little possibility to collect for damages beyond medical
treatment, lost wages and property loss. Insurance
companies threw up their hands in sympathy, claiming
victims can only be compensated for what can be measured -
tangible goods and services.
A No-Brainer Way Of
Getting Credit And Credit Cards
What Is Your Credit Rating Now?If you have any charge
accounts now, or have ever borrowed from the bank to buy a
car, or if you ar paying on a mortgage, there is credit
information on you.Up until a few years ago, you could only
guess at what your credit rating was, because the credit
bureaus who keep track of borrowers wouldn't tell the
borrowers anything! But that's been changed through several
laws, and now the bureaus have to send you your credit file
when you request it.
Credit Cards for Home
Business
It is wise for you to have a company credit card like a
VISA card. How can you find the least expensive bank card
for your business? You may decide to use a VISA card from
your local bank.
Learn How to Improve Your
Credit Score
Having a damaging credit record can hurt you in many ways.
It may prohibit you from making an important purchase such
as a home, car, computer or vacation.
Avoiding Credit Card
Traps
The next time you open your credit card statement, take a
closer look at the small insert titled "changes to your
credit card agreement". You know the one I'm speaking
about.
Why Does FACTA Matter to
Me?
FACTA stands for Fair and Accurate Credit Transaction Act.
FACTA is the law which allows any American access to their
credit report once per year.
Bankruptcy vs. Credit
Counseling: What Should I Do?
Credit Counseling and bankruptcy are both ways to relieve
the stress of debt. However, they are very different and it
is important to understand both before making a decision as
to which is best for you.
Good Credit -- Essential
for the Prospective Home Buyer
Credit is a funny thing. It can be a useful tool in the
hands of an informed individual, or a weight of burden to
the unsuspecting.
Cash Advance - How Does
It Work?
If you want a cash advance or a payday/paycheck loan, you
usually get a personal check. Some companies use your bank
account or credit card in addition to or instead of a
check.
Repairing Your Credit
Score and Clearing Derogatory Marks on Your Credit
Report
Raising your credit score can be a fairly simple and
straightforward process unless you have derogatory marks
that need to be disputed (which will be explained
below).The reasons for bad credit can be as follows, high
balances, bankruptcies, late payments, and many others.
Credit Report
Hassles
There is no end to the amount of pain that your credit
report can cause you. If you have a bad credit history this
is something that can follow you around and wreak havoc on
your life without you even knowing it.
What Are the Most Common
Ways to Commit Identity Theft or Fraud?
It's the number one source of consumer complaints at the
Federal Trade Commission (FTC), and unfortunately, it's one
of the simplest crimes to commit. Identity theft involves
information from your daily life, from shopping,
bill-paying, and even applying for a job.
Your Consumer
Rights
If you have ever fallen behind on your debts you already
know that dealing with your creditors can be a hassle.
Sometimes it can be downright humiliating.
Fixing A Credit
Report
Fixing a credit report starts with seeing what's on it. You
may get access for free online.
7 Consumer Credit Laws
You Should Know if You are Trying to Repair Your
Credit
There are seven consumer credit laws you should be aware
when dealing with your credit.1.
Is it Safe to Use Online
Car Finance?
Online car finance is convenient. You can apply over the
net and shop around for a good deal from the comfort of
your home.
Top 7 Factors to
Consider While Reviewing Credit Card Offers
Credit cards have migrated from being hip or convenience
product into a must have entity for everybody. Shopping
Online you need a credit card.
Fight Credit Card Fraud
with Common Sense
By now, you have undoubtedly heard of credit card fraud, an
alarming and damaging trend that is sweeping the country.
Here's the bad news: It is disturbingly easy for thieves to
obtain your credit card number--usually from discarded
receipts or even directly from you.
Credit Repair Myths and
Facts
There are no secrets to repairing your credit. Many shady
credit repair agencies would love you to think the
contrary.
|
|
