Your Fico Score You may have heard the term FICO score. FICO stands for Fair Isaac Corporation and is actually traded on the New York Stock Exchange under the symbol FICO. It is essentially a credit scoring system that ranges between the numbers 300 and 850. The higher your number, the better credit score you have. Generally speaking if you have a number above the 650 mark you have a good credit history and this will enable you an easier time obtaining a loan. If you have a lower number than this, there could be a few obsticles trying to do so not to mention if you can, a higher rate of interest payable. You actually have 3 separate FICO scores at each of the main credit bureaus. But there can be slight differences in the numbers at each since they are not exact copies of each other. In some cases, just one of these scores may be looked at, in others they may look at all 3. While each of these credit bureaus use methods similar to that of the FICO, they often will be refered to by the following names: Equifax - BEACON® Score Experian - Experian/Fair Isaac Risk Model Trans Union - EMPIRICA® Score Your FICO score is determined from points of information on your credit history report. The type of things that influence your score are issues such as your - Payment history 35%, How well have you paid off your debts in the past? Did you pay them off on time? Where there a few late payments? Are there or where there any overdue payments? These are usually in the form of credit card bills, big store accounts, mortgages, and other various loans such as cars etc. Also, have there ever been any bankruptcies in your history? What about lawsuits or wage garnishments along with liens? - How long have you had a credit history 15%? If you have just started out obtaining any form of credit, your history will not be very deep at all and your perceived level of trust may still be fairly suspect simply because there is no real history to base it on. Where as if you have had 20 years for example, some good trends have been developed and give a better indication of what is can be expected for the future. - New Credit 10% How many new accounts are in your name and how many credit inquiries have you made lately. If you have a lot of new credit lines opened, this could reflect negatively on your score since it raises the chances of default on some of those. However, if you have had them opened for a long time and you are good at paying them back, that is a different story. - Amounts you owe 30% How much money do you actually owe various creditors as well, what amount of your maximum available are you owing? There is a difference if you are just about all paid up to a few different creditors compared to just beginning to pay them off. - Types of credit you have 10% If you have a variety of credit such as a major credit card, a department store card, a mortgage and a car loan. Your FICO score will be created taking these factors into account. Not one single aspect will be singles out, but all combined into creating your score. However, sometimes if there is a certain negative factor in one area, it could have a bigger impact than expected. While your FICO score is created up of these different aspects, this is not necessarily the only factor a creditor will take into consideration before offering you a loan. They may also want to see how long you have had a job, your income and your job security. Here is a general overview of a credit score: - Scores under the 600 level are generally considered to be a bad credit score, this will result in higher rates of interest charged as well as some places will actually deny you credit. - A score between 620 and 659 are fairly good and you should get credit at most places with this kind of a score. You will receive a fair interest rate with any credit obtained. - A score in the 660 to 719 range are generally agreed to be very good, you will almost be guaranteed on a credit application as well as a pretty decent interest rate. - A credit score above the 720 range is an excellent score, this will allow you to obtain an excellent rate of interest on any credit you receive. Here is an example of how your FICO score affects your interest rate charged to you. Credit Score - Interest Rate 720-850 4.22% 700-719 4.67% 675-699 5.09% 620-674 6.23% 560-619 7.75% 500-559 8.02% If you are interested, these numbers will provide you an indication as to where you sit: 1% up to 499 5% 500-549 8% 550-599 12% 600-649 16% 650-699 19% 700-749 28% 750-799 11% 800+ |
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Information to help you raise your credit score |
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