Credit Report News, Tips & Advice
Website CertifiedPrivacy Protected

Do you know what your Real Score is?

By Andy Snyder
Published: Sunday, December 6th, 2009

Figures that define how credit worthy a person is- this is what credit scores are. This three-digit number ranging from 300 to 850 is a person’s rating regarding his or her financial status. In particular, what are being described in here are the Fair Isaac corporation (FICO) scores, which is generally used by credit bureaus in measuring risks in credit.

If such a digit-combination has a definitive and predictive power on how good or bad a person is in paying debts on time then this number must have been crucial for a person to know. However, according to the 2003 survey done by the Consumer federation of America, only two percent of Americans are aware of their credit scores.

The accuracy of these numbers in representing a person’s financial stand is not and is never a guarantee. How experts come up with digits that would summarize one’s credit worthiness is by basing the calculations to one’s credit report. Thus if the credit report is erroneous then expect a misleading credit score. To avoid this scenario always follow credit report advice in dealing with such problems.

The system of scoring credit worthiness was developed by people who believed that everything can be predicted, to provide a basis of knowing the probability of a person paying what he or she owes on time. The FICO scores, specifically, was pioneered by the joint forces of the Fair Isaac Corporation Minneapolis and Equifax 20 years ago.

So what are the criteria for judging to obtain one’s credit score? FICO scores consider the following: 35% for payment history, 30& for amount owed, 15% for length of credit history, 10 % for types of credit used and another 10% for new credit. These categories are pivotal as reflected by their respective percentages so as a credit report advice, make sure that your data involving these items are properly documented.

Credit scores and the probability of having your loans, be it a housing or car loan, approved are directly proportional- the higher the score, the higher the probability. While interest rates and credit scores are indirectly proportional- the higher the score, the lower and more favorable the interest rates are. Either ways, the consumer wins. Thus another credit report advice, keep your records clean to have more chances of getting higher credit score.

According to FICO, scores ranging from 770 and above are considered best scores. Scores of 700 are considered good but those scores below mid-600 may experience interest rate hike.
Credit scoring system was introduced so as to establish a standard and to avoid biases that may come in between transactions of the lending processing. Credit scores are aiming to envisage credit behaviors thus these numbers can be very influential to lenders. Take advantage of this defining power by making your scores higher. By following credit report advice one can actually make it happen.

It is also important to understand that FICO credit scores are not coming from FICO directly. Fair Isaac Corporation is just providing software of a particular mathematical formula used to have the scores calculated. They provide this software to credit bureaus, who then are generating the scores.

If your credit score is your stand in the credit worthiness continuum, make sure it really represents you. But first things first, as a credit report advice, know your score!

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.