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Credit
Score – what is a credit score?
One of
the most important information in a credit report is the credit score. The
FICO (Fair, Isaac and Co) score is the single best score that reflects one’s
credit worthiness. This score gives the lenders a prediction of the risk
involved in offering a loan or a mortgage. Credit score has a value from 300
to 900 and if one has a score of 650 and above, the risk is considered to be
less and hence the applicant of a loan has a high probability of being
accepted by the lender. The higher the score the better it is for anyone.
What
factors determine the credit score?
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Past
history of credit repayments
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Extent of
utilizing the credit limit in the past. For example, if a person has been
set a limit of say, $ 5000 on a credit card and if the person always has
outstanding dues which are almost close to the limit, then the person is
considered risky.
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Number of
years a person has had a credit. More the years, better the score.
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Frequency
of loan applications. If a person applies for loans often, he may have a
less score.
There are
other factors also the FICO system considers before calculating a credit
score for a person. If you are looking for a mortgage and if you do not have
a favorable credit score, it makes sense to build credit worthiness before
requesting for a loan.
Information from various
sources that will help you in understanding the various aspects of credit cards,
car loans, personal
loans, mortgage loans,
debt consolidation loans and credit reports, are presented on this website. Click through
these links and get to know more before applying for any loans, credit reports
or credit cards. |