Knowing What Is A FICO Score

There are many people who want to know what is a FICO score. Fair Isaac Corporation or FICO is the originator of the standard. Most of the lenders nowadays will look into the applicant's credit history and then assess if they can extend a good loan. This credit assessment tool basically involves five factors which are the new credit, payment history, credit history length, level of indebtedness, and credit used types.

This method of assessing credit history will be based on some figures such as a good credit holder will have a rate of six hundred fifty while bad credit holders will have a rating of below six hundred twenty. Remember that the range is different from other standards and here the range is three hundred to eight hundred fifty. This column will aid loan applicants to understand every factor.

It is essential to understand the percentages of the standard. Payment history is given thirty five percent, total amounts owed is given thirty percent, credit history length is given fifteen percent, new credit is given ten percent, and credit used type is given ten percent. If you go through the figures, most lenders take into account the borrower's number of debts and capacity to pay totaling sixty five percent.

The payment history is examined through the applicant's account payment information like the mortgages, credit cards, finance company accounts, retail accounts, and installment loans. Lenders will consider also the borrower's adverse public records like bankruptcy, delinquencies, judgments, wage attachments, suits, and liens.

The amount and number of accounts are examined through credit lines proportions, amount of accounts, installment loan proportions, types of accounts, and the number of balances. Credit history length is examine by the borrower's account activity dates and various account opening dates. While for new credit, they examine the open account frequencies, positive credit history, recent credit inquiries, credit inquiry frequencies, and recent account opening.

Applying for a huge loan is difficult if you got a bad credit history. If you really want to obtain a loan, better improve your scores by advancing payments to all recent existing obligations. Getting a huge loan is risky and better not buy those wants than the needs. It is best for you to wait for the right moment wherein you have settled all your obligation and get ready to obtain mortgages, car or housing loans. Always take note that interest rates are high when you obtain huge loans.

Huge amounts of interests can be overwhelming as when you are facing unexpected emergencies. Unexpected financial needs can disturb the regular monthly payments and will result to delay payments. That is why, a loan applicant must evaluate his financial stability if one's income can manage those unexpected financial problems. Better assess your savings and current monthly income before applying. Careful planning is important for any types of loan application.

For further question on what is a FICO score, better find an excellent financial expert who can help you understand the surrounding process and successful credit history improvements.