Edge of Bankruptcy

Submit Enquiry

Name

Email

Phone:

Enquiry Type

Comments

Enter Code:
Captcha

How to Understand your FICO Score

Whether you are or have ever been in the market to buy a new home or simply trying to refinance an existing mortgage, one thing is for certain: you have heard the term FICO and/or Credit Score more than once throughout the process. But do you know what these numbers actually mean? Has anyone explained to you who and what FICO is, beyond a number that can alter your life?

FICO, Fair, Isaac and Company, is just one (the most popular) of the scoring models within the mortgage world designed to make the home loan process easier for the lenders by placing a "score" on applicants. Basically, this score tells a lender how likely you are to pay your bills on time by calculating together all aspects of your credit history and current financial activities to arrive at a number between 350 and 850- your credit or FICO score. The higher the number, the better loan opportunities and rates you'll be qualifying for. Therefore, someone with a FICO score of 820 will qualify for a much better program than someone with a 670 score.

The "cutoff" score is 620- This is the number that separates the good scores from the bad. Any mortgage granted for someone with a FICO score of 619 or below is considered a higher risk than those with a score of 620 or above. The "less than 619 mortgage market" is referred to as the "Subprime Lending Market", an area full of predatory lenders, higher rates and some ridiculously high fees.

That part is relatively simple, but what about the formula for calculating the actual score?

The basis and calculations of FICO scores has been shrouded with mystery since its inception, mostly due to the rise of competition. Once Fair and Isaac could prove that the scoring would work, it would only be a matter of time before other scoring models came into existence and took over (The Beacon Score, for example), leaving the originators left out in the cold.

Here's the latest breakdown used by the credit bureaus to calculate your FICO score:

- 35% is based upon the payment histories with all of your creditors (with recent accounts weighted a bit more than past ones).

- 30% is the amount of debt you owe.

- 15% is determined by the amount of time you've utilized your credit (longer credit with on-time payments is better.)

- 10% is based on the number of inquiries into your credit history (how may loans or lines of credit you've applied for), plus the most recent history of all bills.

- 10% is the mix of your credit0 installment loans (car, personal loans), revolving credit (credit cards), and other – (mortgages and leases).

Brock Hayslip recommends that you visit http://www.equifax.com for more information on FICO Score.This article is free for republishing
Source: http://www.articlealley.com/article_70803_19.html


Don't Miss...
  1. California Reverse Mortgage: Let Your Property Secure Your Future
  2. Choosing The Best Deal For Home Mortgage Refinance
  3. California Reverse Mortgage Lender: the Best Companion for Senior Citizens
  4. Refinance Loans
  5. Car Loans UK: Get Your Own Dream Vehicle With Ease
  6. Instant Cash Loans: prepare yourself for financial urgencies
  7. Loans Can Be Good Loans Can Be Bad
  8. Secured Homeowner Loans: Home Equity Fills Financial Vacuity
  9. The Awkwardness of Payday Loans
  10. Commercial Mortgages for Business Owners with Bad Credit Records
  11. Secured Loans UK Provide A Low Cost Way To Get Money
  12. Tenant Loans: Help You Find Financial Leniency
  13. Specially Designed for Homeowners-Secured Homeowner Loans
  14. Cheap APR Loans: Helps To Fulfill Needs At Cheap Rates
  15. Secured Loans: Secure Favorable Perks For You
  16. Tenant Loans: An Obligation Free Help
  17. Secured Home Loans: A Home For All At Cheap Finances
  18. Secured Loans – Less Costly Funds For Your Needs
  19. Secured Loans UK: Easy Money For Easy Fulfillment Of Needs
  20. Cheap Secured Personal Loans: Offers Hassle Free Low Rate Finances
  21. No Credit Check Payday Loans - A Quick Way Out Of Financial Emergency
  22. Pay Day Loans - Pros And Cons
  23. No Fax Payday Loans Online - 3 Reasons To Use A Payday Loan Company
  24. Secured Business Loans Are For All Including Bad Debtors
  25. No Credit Check Payday Loans - A Quick Way Out Of Financial Emergency
  26. SBA Loans: Qualifying and Applying
  27. Obtaining Money for Tenants is Easy With U.K. Tenant Loans
  28. The Vanishing Second Mortgage
  29. Business Loans for Women Go-Getters!
  30. Get the Advantage of Secured Homeowner Loans
Latest...
  1. Mortgage loans Obtaining Mortgage Loans Depends on FICO scores
  2. How FICO Can Determine Your Home Loan Approval
  3. Three Strategies to Improve Your FICO Score
  4. What's in Your FICO Score?
  5. Poor Credit Home Mortgage Loans - The Role Of The FICO Score
  6. Tips For Tenants With Low Credit Score Who Need A Loan
  7. Credit Scores and Auto Insurance
  8. Good Credit Score Number
  9. How to Increse Your Credit Score with a Bad Credit Debt Consolidation Loan
  10. Bad Credit Score - It Does Not Have To Be An Obstacle

© Edge of Bankruptcy 2008. All Rights Reserved