Posts Tagged Fico
What Is My Credit Score or FICO Score
Posted by admin in Credit Score on November 6, 2010
What Is My Credit Score or FICO Score
What is my credit score is a crucial question to get replied for financial reasons. To cognize What is my credit score you will have to first understand What is a credit score. The credit score which is also cognized as FICO score is a concept created by Fair Isaac Corporation. Fico score is proprietary of Fair Isaac Corporation and hence the formula utilized to cipher the Fico score is under the wraps
Credit score is a three digit number which defines an idiosyncratics credit worthiness. Higher the credit score better is an individual’s credit worthiness and hence lower is the risk of imparting to the individual
From Bankers to employers many use credit score as a base to find out the financial risk. Hence it is very crucial to cognize how much is the credit score and seek to better the credit score as much as accomplishable, though not everyone lends established on credit score
Good credit score ranges anywhere from 825 to 650. Low credit score is from 575 to 650. Anything below 575 is considered as Bad credit score. For someone with an acceptable credit score the rate of interest will be lesser as the risk tied in is lesser likened with someone with a sorry credit score
Credit scores are found out established on the postdating factors
1. Payment history
Payment history says about your past financial obligations and how quickly you met them. Problems much as bankruptcy will reduce your credit score. If you paid your credits promptly you will get a higher credit score
2. Current debt
How much you be contributes to your credit score. This factor considers the attendant financial position. If you are in debt with an ample number of sources then obviously it is traveling to pull down your credit score significantly
3. Duration of Credit History
If you are having an acceptable credit history over an abundant period of time, then you will land with an acceptable credit score. It is akin to someone with longer work experience is chose over someone with lesser work experience. Having a good credit history over longer time period is crucial
4. Number of Credit
If a person has more number of credit cards, then it gives a minus impression about the person’s credit and so it will lower the person’s credit score. Someone with lesser credit sources will be given a higher credit score
What Is The Meaning Of Your Credit Score?
In the United States, your credit score is everything. It is something that you should take care of. If you don’t, getting a phone, cable or gas line hooked up in your home can be difficult to do.
There are also certain companies that take a look at your credit score first before they even hire you. Even if you are qualified to do the job, a low credit score can ruin it all for you.
Your credit score is also analyzed by creditors, such as banks and credit card companies. Just try to imagine that you need to get a loan to start your own business, with a low or bad credit score, you have a lesser chance of getting that loan approved or you may get it approved but with high interest rates.
The same thing goes when you apply for a credit card. Credit card companies or banks that issue credit cards will first take a look at your credit score before they can get your application approved. A high credit score means that you have a greater chance of getting the best credit card deals with a lot of features and also with low interest rates for your every purchase using a certain credit card.
Even if you are applying for a mortgage, a car loan and other kinds of loans, your credit score will play a very important role in it. This is why it is very important for you to have a high credit score and maintain it that way or increase it.
First of all, you have to understand what a credit score actually is.
A credit score will be a three digit number from 300 to 850. This number will represent a calculation of the likelihood of whether you will pay their bills or not. This means that if you have a high credit score, creditors will be sure that you a better credit risk than someone with a low credit score.
In the United States, FICO (or Fair Isaac Corporation) is the best-known credit score model in the country. They calculate your credit score using a formula developed by FICO. The system is used primarily by credit industries and consumer banking industries all across the country.
Credit scores are calculated using the following factors:
* Punctuality of payments
This will be 35% of the calculation. If you pay your bills on time or before the due date, your credit score will tend to be higher.
* Capacity used
This will amount to 30% of the calculation of your credit score. It will contain a ration between the current revolving debts to total available revolving credit. If you use your credit card and if you don’t use its entire credit limit, you will get a higher credit score.
* Length of credit history
This will amount to 15% of the calculation of your credit score.
* Types of credit used
This can affect 10% of your total credit score.
* Recent search for credit or the amount of credit obtained recently
This will amount to 10% of the total calculation of your credit score.
Surprisingly, not many people know their credit score and often end up wondering why they got denied for their loan or credit card application. You can easily obtain a copy of your credit report by requesting for it from the three major credit reporting agencies. The law allows you to order a copy of your free credit score from each of the nationwide consumer reporting companies every 12 months. How can you find out what your credit score is?
* On the web
Visit http://www.annualcreditreport.com
* Via toll-free telephone number
Call 1-877-322-8228
* Via mail
Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can you can get a copy of the form from: ftc.gov/bcp/conline/edcams/credit.
You may order your free credit score from each of these nationwide consumer reporting companies at the same time, or one at a time.
They will be able to provide you with a free calculation of your credit score every year. It is also a great way to find out if there are any errors in your credit report that may be causing you to have a low credit score. You can request it to be fixed in order to let you have a higher credit score than before.
Always remember that your credit score is an important factor of your life. Keep it high and you will get better deals on loans, and credit cards.
Eugene