Credit Scores
Credit scoring is a grading system that adds or subtracts points based on select
data in your credit report. Late payments, maxed out credit cards, and bankruptcies
are negative factors that take points away. A solid payment history and prudent
use of available credit add points. Your final grade equates to your credit score.
What is a FICO Score
The Most common Scoring comes from Fair Isaac Corporation, a publicly-traded corporation
that created the best-known and most widely used credit score model in the United
States. The FICO score is calculated statistically, with information from a consumer's
credit files. The FICO score is primarily used in credit decisions made by banks
and other providers of secured and unsecured credit.
FICO scores are usually intended to show the likelihood of a borrower to repay a
loan. Banks and other institutions using such scores as a factor in their lending
decisions may deny credit, charge higher interest rates demand more collateral or
require extensive income and asset verification if the applicant's FICO credit score
is low.
You are a Three Digit Number
- FICO scores range from 300 to 850
- Anything under 645 is considered high risk
- The higher your score the more money in your pocket
Example:
- A consumer with the highest score range of 760-850 with an interest rate of 5.55%
would pay a monthly mortgage payment of $856.
- One within the lower scoring range of 620-639 with an interest rate of 7.15% would
have a monthly mortgage payment of $1,012.