Go Getters World

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.

Just as with a car loan or house loan, you FICO score determines your interest rate. Something most people do not know however, is that a FICO score can also affect your chance of finding new employment, which is increasingly important in the current economy.

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.

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 Debts (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%)

This was a surprise to me. If you have a car loan, and you pay it off immediately, it is not as good as if you have a car loan drawn out for a long period of time and you make payments regularly. However, keep in mind that the difference you pay in interest may not be worth the higher FICO score.

Inquiries (10%)

Any time you apply for something that requires credit, the other party with pull your credit score. Some are soft pulls and some are hard pulls meaning some won’t pull quite as much information and will have little to know affect. Others will. A soft pull would be checking your own personal score or report.

Type of Credit (10%)

Is your credit from a car loan or a mortgage? If it is a mortgage, how much do you currently owe compared to the original amount loaned. How many accounts are open. It is not always beneficial to open a new account to receive more available cred

SBFC law group SBFC law group

Related posts:

1. Low FICO Score Home Loan
2. Raise Your FICO Score
3. Increase Your Credit Score And Repair Your Credit
4. Bad Credit Auto Loans: Preparing Yourself For The Best Deal
5. Credit Rating – What Can I Do To Bring It Up?
6. Credit Repair Help – Why Is It Important?
7. 3 In 1 Credit Reports With Your Credit Score
8. How Bad Credit Scores Affect Loan Eligibility
9. Compare Personal Loans For The Best Rates
10. Credit Repair Help – The Best Way To Save Thousands
11. The Secret To Personal Loans
12. The Fastest Way To Have Poor Credit Private loans Approved In Our Recession
13. Securing Money From Payday Loan Lenders
14. The Fastest Way To Have Poor Credit Private loans Approved In Our Recession
15. Bad Credit Loan