Free Credit Score
 
HOME | CONTACT US | SITE MAP

FreeCreditScore.info


Fico Scoring Basics

FICO scoring originated from the Fair Isaac Company. The Fair Isaac Company invented the current credit scoring system that turns all of your credit information into a personal credit score. Today lenders still use this credit scoring system to determine credit risk. The term FICO scoring means, a credit score based on the Fair, Isaac Company or FICO model. It's important to know your current credit or FICO score and it's also important to have an understanding of how FICO score is determined. FICO scoring is used by lenders to figure out what your interest rate will be on loans you apply


for. If you're buying a house the types of mortgages available to you are based on your personal credit score. That score is based on the FICO model and the interest you pay, as well as your monthly payment, is based on what your personal credit score number is. The same is true when you get a car loan, as well as the premium on your car insurance or homeowners insurance. Your personal credit score can even affect your chances of getting new employment. FICO scoring is calculated from a multitude of different credit data and it is grouped into five different categories. So that you will understand the basics of how FICO score is determined, the percentages below reflect how important each of the categories are in determining your personal credit score. Payment history (35%)

Your payment history is the largest factor in determining FICO scoring. This includes the number of unpaid bills you have, any bills sent to collection, bankruptcies etc. The more recent the problem, the lower your score. Outstanding Debt (30%)

How much of the total credit line is being used on credit cards and other revolving charges? High balances or more precisely, balances that are close to your credit limit can negatively affect your credit score. Most lenders think 40%-60% of maximum is ideal. Length of your credit history (15%)

How long have your accounts been open? High loan amounts that you have paid as agreed and have had open a long time work best. Closing old accounts can have a negative affect because it makes your credit history appear shorter. Recent inquiries (10%)

Every time you apply for any kind of credit you create an inquiry on your credit report. A lot of inquiries negatively affect your credit score. However, ordering a copy and checking your own credit report or personal credit score counts as a soft inquiry and does not go against your score. Types of credit in use (10%).

How much is still owed on current mortgage loans, credit cards and finance companies compared with the original loan amounts? Also it's important not to open a number of new credit card accounts just to increase your available credit. It will have the opposite affect and lower your score. FICO scoring is based on all the categories of information, not just one or two. Lenders on the other hand will look at a lot of things when they make a credit decision. Your income, how long you have worked at your present job and the kind of credit you are requesting will always be a factor. There are many things that will affect your financial future and FICO scoring plays a big role in how successful your future will be. Copyright? 2005 Credit Repair Facts. com All Rights Reserved. This article is supplied by http://www. credit-repair-facts. com where you will find credit information, debt elimination programs and informative articles that give you the knowledge to correct your own credit and credit report. For more credit related articles like these go to: http://www. credit-repair-facts. com/articles_1. html

Author:
Gary Gresham




Do you have a web site? Please link to us!


FreeCreditScore.info: Fico Scoring Basics

More Free Credit Score information:

Article: 5 Ways To Raise Credit Score 5 Ways To Raise Credit Score

Article: Tips On How To Fix Bad Credit Tips On How To Fix Bad Credit

Article: Save Money and Lower your Payments by Improving or Repairing Your Credit Save Money and Lower your Payments by Improving or Repairing Your Credit

Article: Five Reasons to  Repair Your Credit Score - You Can Do It Yourself Five Reasons to Repair Your Credit Score - You Can Do It Yourself

Article: Are the Credit Bureaus Really Helping Us Are the Credit Bureaus Really Helping Us

Article: The FICO Score Misconceptions The FICO Score Misconceptions

Article: Legally Clearing Your Credit Legally Clearing Your Credit

Article: Fico Scoring Basics Fico Scoring Basics

Article: Repairing Your Credit Score and Clearing Derogatory Marks on Your Credit Report Repairing Your Credit Score and Clearing Derogatory Marks on Your Credit Report

Article: What To Expect From A Credit Repair Company What To Expect From A Credit Repair Company

Article: Restore Your Credit Rating And Reduce Your Debts Restore Your Credit Rating And Reduce Your Debts

Article: Credit Repair Myths and Facts Credit Repair Myths and Facts

Article: Common Credit Score Myths Common Credit Score Myths

Article: What Is A FICO Score? What Is A FICO Score?

Article: 5 Ways To Prevent Credit Card Late Fees 5 Ways To Prevent Credit Card Late Fees

Article: Does Working With a Credit Counseling Organization Hurt Your Credit Score? Does Working With a Credit Counseling Organization Hurt Your Credit Score?

Article: Why Your Credit Score is Important Why Your Credit Score is Important

Article: Your Credit Rating and How To Check It Your Credit Rating and How To Check It

Article: Your FICO Score and Applying for a Loan Your FICO Score and Applying for a Loan

Article: Beware of Bogus Credit Repair Companies Beware of Bogus Credit Repair Companies

Article: Is Your Credit Score Being Held Against You? Is Your Credit Score Being Held Against You?

Article: Insurance Credi Scoring An Ethical Issue Insurance Credi Scoring An Ethical Issue

Article: Good FICO Credit Score?  Tips to Getting the Most Out of Your Home Mortgage Loan With Good Credit Good FICO Credit Score? Tips to Getting the Most Out of Your Home Mortgage Loan With Good Credit

Article: Credit Repair Services vs. Do-It-Yourself Credit Repair Credit Repair Services vs. Do-It-Yourself Credit Repair

Article: Credit Help for Real Estate Financing: Five Categories of Your Credit Score Credit Help for Real Estate Financing: Five Categories of Your Credit Score


 
Copyright 2000-2006 FreeCreditScore.info. All Rights Reserved.
Home | Contact Us | About Us | Site Map | Add URL