What's A FICO Score…..exactly?

Many people do not understand about how credit scores work. They may ask, ‘What's a Fico score’?

A Fico score is the way lenders measure a person’s credit worthiness, and determine how high the interest rates will be on a loan, mortgage, or other line of credit.

The borrowers score is calculated by using the credit information on their credit report.

FICO scores are based solely on credit information, and cannot be judged on race, religion, marital status, gender, or nationality.

Since your credit rating changes, a Fico score can fluctuate.

The Fico score is calculated based on numerical values for different credit characteristics.

The higher the Fico score is, the better chance you will have of getting credit with lower interest rates.

Items on your credit report that can lower your Fico score:

· Bankruptcy

· Non bankruptcy negative public records

· Charge-offs or loan defaults

· Repossessions

· Serious payment delinquency

Other facts that determine your Fico score:

· Number and age of your lines of credit

· How much current outstanding debt you owe

· What types of credit you have

· The amount of credit you owe

· How many credit inquiries you have had recently

Your overall use of credit is the key when determining your Fico score.

The factors with the worst outcomes are: collections, judgments, late payments, bankruptcies, too few or too many revolving accounts, current balances, finance company accounts, collections, the number of credit inquiries made, and the number of accounts opened in the past year.

One late payment will not ruin your credit score, a history of many late payments and high credit balances will have a negative effect on your Fico score. You will need to obtain your credit report to make sure some of these negative items are correct. Your credit report can contain errors which will impact your Fico score even though they are not yours. You will need to work to get these false credit items off of your credit report.

What's A FICO Score | What Do The FICO Scores Mean?

Your Fico score is calculated using a mathematical equation to compare information on your credit file with millions of other credit files. This score can identify your level of credit risk.

The higher your Fico score, the more likely it will be that you will be approved for a loan with lower interest rates.

The term “Fico Score Range” is the range of all Fico scores, which is between 300 and 850. More than 70% of the 100 largest financial institutions use FICO® scores to make their credit decisions every year, including over 75% of all mortgage loans.

Lenders use FICO scores to determine how you have managed your credit accounts in the past to help determine if they will give you a loan. This will also determine the interest amount you will pay on that loan. The higher your FICO score, the lower the interest rates.

Your FICO score is a valuable guide for money lenders and is based entirely on the information in your credit history. Lenders will also take into account the information you provide in your credit application. This could be, your income, how long you have been at your residence, and your payment history with other banks or lending institutions.

Your FICO score is divided into different sections:

• Summary– The summary shows your FICO score and the date it was calculated, with a description of what your particular score means. Other details on your FICO score are available in other sections.

• Top Positive Factors– The information listed in this section show areas of your credit behavior that are better than average. This contributes to a higher FICO score, and continuing to manage your credit over time will give raise your credit score even more.

• Top Negative Factors– If you have a high credit score, these items have not affected it and should not be taken too seriously. These are factors that have some room for improvement, and can give you a better understanding of how to manage your credit better.

• How Lenders See You– The majority of lenders use FICO scores to estimate your credit risk. People with high FICO scores are a better credit risk than those with lower scores. There is no way to absolutely predict whether an applicant will repay a credit account.

What Factors Affect A FICO Score | What Is A Good FICO Credit Score?

A good Fico score is a score of about 725 or higher. To be sure you maintain a good Fico credit score, you will need to keep your payments current on all loans and credit accounts. If you are late on your payments quite often, your good Fico credit score will lower remarkably.

Tips to Keep A Good FICO Score

-To keep a good Fico score you will need to be diligent in paying all your credit accounts on time.

-Not owe more than 70% of your line of credit, try to keep this down as it will count against your Fico score.

-A Fico score is also determined on the number of outstanding credit accounts you have open, too many and your Fico credit score will plummet.

You can have a couple of credit card accounts, but don’t go overboard. A revolving credit account or two will not hurt any thing either. Just make sure you don’t have a history of late payments, one won’t hurt anything but if you make it a habit your Fico credit score will be much lower.

It really isn’t difficult to maintain a good Fico credit score, you just need to follow the above tips. Keeping a good Fico credit score, will assure that you will be able to get a home or car loan quickly and with an excellent interest rate.

The number on your Fico credit score will range between 300 and 900, 300 being a very low Fico score.

The breakdown of how your Fico credit score is determined is explained below.

* 35% is based on your payment history. The score goes down each time you make a payment late, if the payment is sent to collections, or you declare bankruptcy.
* 30% is how much debt you owe. Try to keep your credit card balances at or below 50% of their limit.
* 15% is determined by the length of time you have had the credit. The longer you have had established credit, the higher your score will be.
* 10% has to do with the number of times someone has inquired about your credit. The more and more recent these inquiries are the worse your Fico credit score will be.
* 10% is based on the types of credit you have now. This includes any loans that are available to you. This is about credit and credit cards. While there is no set number that you should or shouldn’t have. This is the last factor on which your credit score is based.

What's A FICO Score?

A FICO score also known as a Beacon Fico Emperica score is a credit score.

These are complex calculations based on the three major credit reporting bureaus.

These scores are called by different names but use the same calcualation.

What's A FICO Score? What do the Scores Mean?

Most Beacon Fico or Emperica Credit scores range from 350 to 850.

725 plus is considered a nearly perfect credit score, 640– 719 is a good average credit score by American standards.

A credit or fico score of 639 or less is considered to be below average and any score less than 575 is a very poor credit score.

What's A FICO Score? What is A Vantage Score?

There is a new, and not yet commonly used Vantage score or Vantage credit score.

It was designed to make the scores more easy to understand.

Vantage scores are figured the same way school grades are. If your score is 60 or less the score is an F, 61 to 70 is a D-below average, 71 to 80 is a C-average, 81 to 90 is a B– above average, and 91 to 100 is an A– perfect score.

What's A FICO Score? What Factors Influence Your FICO Score?

The biggest reasons for credit scores to lower are:Bankruptcies,Collections, Charge offs, Late payments, Judgments, Liens, and too many inquiries.

The most common credit score problem is owing more than 80% of your credit limit.

What's A FICO Score?  Is it the same as a credit bureau score?

Credit bureau scores are not the same because most creditors do not report to all 3 bureaus and some don’t report at all unless payment stops. Cell phone carriers, utilities, collection agencies, smaller banks, hospitals, and many other companies only report to credit bureaus when there is bad credit.

Credit scoring is not a measure of a person’s bank account, assets, or income. These scores are based upon the information in the credit report. A credit report doesn’t do much good without the credit score. This is the measure of your credit reliability.

Some quick facts about credit and credit scores:
• The average American has a credit score of 677, credit scores range from around 350 to 850.
• To obtain a low interest bank loan you will need a Fico score of at least 640.
• Middle to high interest loans will want a Fico score of at least 640.
• A poor credit score is 575 or lower.
• A good credit score is 640– 720.
• Your credit score is considered below average when it falls between 576– 639.
• To get very desirable credit terms, you will want a Fico score of 721– 850.