Credit Scoring Basics

Have you heard what a credit score is? Do you know if there good or bad pages, credit scoring? How a score is calculated and what is "FICO" or "Beacon"?

In the heart of the question, a credit score is a number, the liklihood that a loan must be repaid. Lenders decide this number, how much loan you for quailify, and what should be your interest. Low credit scores can cause higher prices and even loan denials, while a higherCan> Guest help you get a better rate on your mortgage and even auto insurance.

Many lenders agencies use computer software development, Fair Isaac, to choose your credit score based on criteria of the lenders charge. The information about you collected from your credit application and a variety of other sources. This collection of information is your credit history.

Have your credit history includes how well you paid your bills, the number andType of accounts you have, late payments, actions, outstanding debt, the age of your accounts and other relevant information. Creditors with the Fair, Isaac statistical program to compare this information to the credit performance of consumers with similar profiles and points awarded for each factor that helps predict who is most likely to repay a debt. So there is where the term "FICO Score comes" from - a credit score is based on the Fair Isaac Company (FICO)Repayment predition calculations.

Credit information, weighted according to their nature and history, the more current information, the weightier the emotion - good or bad. As an example of weighting is a very old 90 days later may be less, as a very last 30 days too late. The type of data is also weighted:

1. Past performance pay (35% or at least the heaviest weight)

2. Credit usage (30% or next heavier)

3. Credit History (15% or third weight)

4. Types of Credit in(10% or minimum) weighted

5. Questions (10% or minimum) weighted.

A FICO score is a snapshot of your credit picture at a particular time and is useful for the lender to decide what type of credit risk you are.Fair says Isaac, "Computers do not make lending decisions, lenders do. Computer analysis of credit -Information to produce a score, but to decide individual lenders, which notes are accepted for different loans or credit cards. "

The overall U.S.Population FICO scores range as follows:

* First 780 to 20%

* 740-780 - 20%

* Between 690 and 740 - 20%

* Between 620 and 690 - 20%

* Among 620 to 20%

Although you may want a free credit report from each of the major credit burueas once a year by http://www.annualcreditreport.com you know your credit score as well. Purchasing a complete report by Fair, Issac will give you a loan from any of the credit history and your burueasFICO Score from each buruea too.