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Bad Credit Debt Consolidation by www.alifeoutofdebt.com
Are you afraid of bad credit? Then this article is perhaps for
all of you who feel bad credit is an issue. Let this be your
first step towards Consumer Credit counseling.
No doubt there are numerous bad credit personal loans but
hunting for...
Credit Reporting Agencies
Credit reporting agencies maintain electronic records of your credit activities. Today, there are three major national credit bureaus: Equifax, Experian and Trans Union. If you are planning on applying for a loan or credit anytime in the near...
Repairing Credit Essentials
There are essentials to repairing your credit and building your history. It depends on your situation, but in most cases you can find a way out of any debt situation. Debt relief is a stressful situation.
When times are hard the last thing we...
The Secret of Credit Card Numbers
Have you ever really looked at your credit card and tried to figure out what that huge string of numbers really means? Do these card issuers have so many customers that your account number has to be 16 digits long?
You may be surprised to know...
Why Some People Never Have Problems With Credit Bureaus
Credit bureaus watch all of us all of the time. If we simply turned over our homeland security to the credit bureaus we would have a huge staff dedicated to stopping terrorists rather than finding out whether we have a handle on asset management or...
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Fair Isaac Corporation Credit Or FICO Score
As I am not from the US, I had no idea what FICO meant before researching it. FICO stands for Fair Isaac Corporation, a company based in California. FICO, put simply, is a person's credit score. A credit score can be used by a potential lender in making a judgement on whether to grant you credit or not, for example when you apply for a new credit card or home mortgage. Therefore, if you are in the US, the FICO score is very important to you. What Does a FICO Score Do?
A FICO score places a value on the types of credit accounts you hold or have held, and your credit history in maintaining those accounts. The FICO score scale ranges from 300 to 850, with the majority of people in the United States in the 600 - 850 range.
Factors Which Affect Your FICO Credit Score
There are 5 factors in all which determine your FICO credit score:
1. Your payment history.
This counts for a very significant 35%--the most of the FICO score factors. As you would expect, paying your bills on time is gets you a good score, while paying them late on a consistent basis is will mark down your FICO score. If you have had debts referred to a collection agency, that is worse still, while declaring bankruptcy is the worst of all.
2. How much you owe.
Another obvious factor that FICO will take into account in arriving at a credit score. This accounts for another 30% of your total FICO score. It is not just what you owe already that affects your FICO score. Also taken into account is the amount of credit available to you. For example, if you have a credit line of $5000, but have so far only used $1000, that will be taken into account.
Your total amount of credit will be totalled, and compared to your annual income. So, loans such as car loans, mortgages, credit cards, store cards, will all be added together. Those who use most or all of their available credit will get a lower rating for this part of the FICO score calculation.
3. Length of credit history.
Another important
factor that makes up 15% of your FICO credit score is the length of your credit history. The longer your credit history, the better for your FICO score. Additionally, though, a long history with any particular lender will be good for your credit score.
4. Type of credit mix.
The fourth factor taken into consideration is the type of credit mix that you have. For example, do you have only high risk unsecured type credit, or do you also have some solid secured loans such as a home mortgags? Those consumers who have a mix of credit have higher a FICO score. This fourth factor just counts for 10% of the total FICO score.
5. Number of new credit applications.
The last factor in the FICO rating is the amount of new applications that you fill out. If you have recently filled out a lot of credit applications, this will hurt your score because it puts lenders “on alert” that something may be wrong. This part of the score is worth 10%.
Lenders themselves will normally look at employment, income, length at current residence, and marital status, but these do not affect your FICO score. If you intend to borrow in the future, you do need to pay attention to your FICO score. If your FICO score is low, this could lead to higher interest rates, extra mortgage insurance when buying a home, and in some cases denial of the loan.
If you plan to take out a major loan, such as a home mortgage, it could be a wise move to get a copy of your credit report 6 months before you plan to apply. That will give you time to look over your history, to ensure there are no discrepancies. If you find inaccuracies, contact the Credit Reporting Agency in writing. They will have 30 days to investigate it, and then correct it if they find your claims are true. You may also want to ask for a revised credit report; they are required by law to supply you with one if an inaccuracy is found and corrected.
About the Author
Roy Thomsitt is the owner and part author of http://www.eliminate-credit-card-debt-now.com
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