Many years ago, in a land far far away, official loans (the people in the bank, which in the glass offices are) actually worked for a living. I know it's hard to believe, but true. If a person came into the bank looking to borrow money, the lending officer's time spent researching the person - their job, their reputation, their financial status, etc. The loan officer, this information would be used together with rational thought (the been extinguished), to identify and whether the person was likely to borrow money and the likelihood that they repay the loans. This information will be compiled and used to determine how much to give the bank the individual would, if at all.
Well ... Then came computers. And came with the computer "data". You see, computers do not think rationally. They have only store and process data. Bankers need a method to standardize and mass produce these loans process and be able to save the relevant "data". [Enter: FICO> Score.] Name for the company that the process developed the FICO score is generated by a mathematical formula (which a computer can do) to the general credit of a person. The formula of information in your credit report can be found on - just a log of all persons, financial matters. A weighted scale of five financial factors combine to derive the FICO score. The breakdown of these factors are listed below. Scores300-900. Most people fall into the 600-750 range.
There are three agencies that this mathematical decision-making: to provide Equifax, Experian and Trans Union. Now days, if the banks make credit decisions, they use these "agencies" to automate the decision making process. This means about 75% of the time, everything that is reasonable meaning. However, since no reasonable person behind the process, 25% of the time, a dart-throwing monkey could provide the sameService.
For example, an owner of the company that does well in more than $ 100,000 dollars per year applies for business credit cards for their business. Used as a holder of the company, their credit report is to set the credit limit on the company credit card account. Visa, on a report Equifax denies their request) for a $ 50,000 corporate credit limit (less than 50% of their annual income, and far less than the average net profit of the company. Meanwhile, I have (a person who is not in the area, where so muchMoney) regularly receives pre-approved credit card offers for good-in over 50% of their income. What gives? The FICO monkey strikes again.
Note the calculation of FICO score breakdown:
35% - Payment History
30% - debt ratio
15% - Length of Credit History
10% - Types of Credit Cards
10% - Inquiries
The FICO score is the debt of a person's history together. If you do not borrow money, your FICO score is penalized.Then, says the FICO score must be consistently borrow money if you want to borrow money. That is a little stupid.
Most people only feel the FICO effects when submitting an application for home loans or financing of automobiles. Although most lenders lean on the FICO crutch, some people still have the old fashion type fashion. If you are anti-debt, find a mortgage company, the "manual underwriting" (old fashion) loans. As far as cars, if you pay the note off --in a timely manner, you will hardly notice the deference in FICO scores.
How do you check your FICO jobs? Under the law everyone is entitled to their credit report (free once) to check in - per credit bureau. This will give you a log on the financing of the relevant office file copy. Each is a credit score free annual report with the title. To check your score and / or reports, I recommend AnnualCreditReport.com. Despite the catchy melodies ofFreeCreditReport.com, the above source, AnnualCreditReport.com is the official source for government-sponsored free reports. Personally, I check an office every 4 months. How can I monitor my reports throughout the year, without expense. Nifty huh?
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