Edge of Bankruptcy

Submit Enquiry

Name

Email

Phone:

Enquiry Type

Comments

Enter Code:
Captcha

The Credit Score Rating Scale Explained

Many people are unaware of what a credit score actually means. In fact, a survey of 1,000 Americans taken in September 2004 demonstrated that only one third of people knew that a credit score was a measurement of how likely a person is to pay off a loan. Having a good credit score is necessary when it comes to applying for loans for cars, mortgages, and credit cards. Furthermore, having a bad credit score can lead to denial of basics such as a phone line in your home. Therefore, it is important for consumers to understand how a credit scores affects them and how it is determined in the first place.

Calculating the Credit Score

In essence, a credit score tracks how well a person incurs debt and how good that person is at paying the bills on time. Businesses, including lending institutions, look for a high score with potential customers because the higher a person's credit score, the more likely that person is to be responsible with finances and the more that person can be trusted to pay back debts.

A credit score may vary from one credit-reporting agency to the next since they do not all necessarily receive the same information from businesses. Some businesses report to all three of the major reporting agencies, while others may only report to one or two. In addition, the statistical pool used by each agency may vary slightly, leading to a different credit score. All of the agencies, however, utilize the same software when it comes to determining credit scores. Fair Isaac and Company (FICO) develops this software and, therefore, the credit score is often referred to as the FICO score.

Score Factors

A person's credit score is not static. It changes all the time. Every time a bill is paid on time or late it is reflected on the credit score. In addition, each time a person takes out a new loan or applies for a new credit card, the credit score changes. This is because the credit score is based on the person's financial history and attempts to make a prediction at how responsible the person will be in the future.

The final score is highly objective and based on statistical data. Points are gained based on specific factors such as late payments, payment history, outstanding debt, and the length of time an account has been open. All of this information is compared to the statistics of people with similar profiles to determine a final credit score.

JP Burkhart recommends that you visit credit score rating scale for more information.This article is free for republishing
Source: http://www.articlealley.com/article_43469_19.html


Don't Miss...
  1. Money Wise Moves on Getting Swimming Pool Loans
  2. Perplexed by the Multiplicity of Mortgages
  3. Mortgage - Harvesting Time for Consumers
  4. Unregulated Loans Can Be a Trap
  5. Secured Loans: A Quick Guide for Consumers
  6. Bad Credit Home Loans Consumers With Bad Credit
  7. Florida Home Equity Loans
  8. Are Personal Loans a Good Idea for Me?
  9. Uses for Personal Loans
  10. Covered Bonds Hope to Encourage Long-term Mortgages
  11. Bad Credit Payday Loans - No Need For A Credit Check
  12. Know your Credit Score
  13. Mortgage refinance- all your financial problems solved
  14. Three Great Reasons to Refinance Your Mortgage
  15. Mortgages - Offset Mortgages
  16. Bad Credit Payday Loans - No Need For A Credit Check
  17. HELOCs and Second Mortgages: Which One Should I Choose?
  18. Miami Online Home Loans
  19. Helpful Information On Reverse Mortgages
  20. Commercial Mortgages
  21. Which Mortgage Is Best For You?
  22. Don't Let That Deal Go Away Residential Bridging Loans
  23. Choosing Between Home Loans and Mortgages
  24. The Subtleties behind Commercial Mortgages
  25. The World of Mortgages
  26. Sub-Prime Mortgage Loans - Things You Should Know About Sub-Prime Mortgages
  27. Understanding Jumbo Mortgages
  28. The Basics of Reverse Mortgages
  29. Unearthing Discounted Mortgages
  30. Adjustable Rate Mortgage
Latest...
  1. The Secret To Increase A Credit Score
  2. What is the National Average Credit Score?
  3. How Does a Credit Score Work?
  4. Five Ways To Improve Your FICO Credit Score, Get Lower California Mortgage Rate.
  5. Unimpressive to Impressive Credit Score through Bad Credit Loan
  6. The Credit Bureaus New "Vantage" Credit Score. (Their "Ad"Vantage or ours?)
  7. Bad Credit Secured Loan for your Better Credit Score
  8. Fixing Your Credit Score Doesn't Have to Cost You Credit repair
  9. Credit Card Surfing 101 and How it Can Affect Your Credit Score
  10. Credit Score Basics and the New Credit Score System

© Edge of Bankruptcy 2008. All Rights Reserved