Edge of Bankruptcy

Submit Enquiry

Name

Email

Phone:

Enquiry Type

Comments

Enter Code:
Captcha

What is your FICO score and why is it so important

In an epic ending to 1999's hit movie "Fight Club", both Helena Bonham Carter's and Edward Norton's characters stand in a high rise building, watching through a window as all of the surrounding credit card company buildings implode and collapse around them. Many moviegoers-whether consciously, unconsciously or subconsciously-took satisfaction in that apocalyptic scene where everyone's credit card debts had instantly been obliterated.

However, it was only a scene in a movie. Besides, it is a bad FICO score that is the root of the problem for those who cannot buy their dream home or get that much-needed car loan. And for those of us in the real world, the all important FICO score is here to stay. Credit card debt is one bit of data that comprises the FICO, but there are several other factors. And those factors can be mitigated if a person knows exactly what a FICO score is and why it so important.



The FICO score is a telltale sign of a person's ability and habit in paying bills. The score tells a potential lender whether a person's behavior towards her/his finances is responsible or neglectful. The higher it is, the better a person is looked upon by lenders, car dealers, credit card companies, etc. There are a few aspects that go into composing the final FICO score that can be completely improved by a positive, more responsible change in a person's financial behavior. The composition of the FICO score includes:

The number of late payments on bills, bankruptcies—personal and business, and other instances where someone may have dropped the proverbial ball in her/his finances. The fewer late payments, the better your score -- though a recent late payment hurts your score more than one from five years ago.

Any extremely large debts. What a person owes on credit cards and on the balances of loans are very revealing of a person's behavior with her/his finances. A mortgage company will look at a person as a huge risk if they use a lot of offered credit. This will appear to a company that a person is taking advantage of credit without assuming the responsible consequences of paying the bill.

How long a person has had credit. How long a person has had credit cards, credit accounts, and how much they use them demonstrates a person's financial pattern. A lending company can determine if a person is constantly making on-the-spot purchases or if she/he is more discriminating in their purchases. If so, a discerning withdrawal pattern shows responsibility and that careful consideration goes into purchases. This shows that a person is consistent in most of their financial dealings. The length of a person’s credit history is also important because it will provide more detailed information to the creditor about a persons credit.



New and recent applications for credit. Several applications for different types of credit or the same kind in short period of time could be indicative of a person's poor handling of finances. This could mean that a person is good at borrowing money but not at paying it, which would turn lenders off.

Types of credit. This includes credit cards, home mortgages and loans, etc.

Other dynamics such as length of time a person has worked at varying places of employment and the value of other owned properties can influence a lender in the decision making process. However, American law forbids personal information like ethnicity, religion, sex or marital status from being considered, just as no one can legally be denied the right to take up residence anywhere for those dame reasons. By putting a little extra effort towards improving the different aspects of the FICO score, credit card companies and loan companies may become a bit nicer. And, unlike in "Fight Club", a person could feel a little bit friendlier towards them in the end.

About Author

Grant Eckert is a writer for Absolute Mortgage Company. Absolute Mortgage Company is a leading provider of Home Mortgage Lender| Mortgage RefinancingThis article is free for republishing
Source: http://www.articlealley.com/article_162394_19.html


Don't Miss...
  1. Unsecured Business Loans: Be Secured With Finance In Hand
  2. Secured Loans market reaches new heights
  3. Release your debt pressure with Bad Credit Debt Consolidation Loans
  4. Personal Loans Overview
  5. What You Can Do To Improve Your Credit Score
  6. Bad Credit Loans Available: Find Out How
  7. Requirements of Payday Loans
  8. Loans - Be Careful With Your Credit
  9. What's Your Credit Score? Not Knowing Could Cost You
  10. Motor Loans: Don’t let financial constraints come your way in buying a car
  11. Cheap Unsecured Loans: Hunt for the best deal
  12. Improved Credit Score Spells Mantra for Bad Credit Mortgage Approval
  13. Mortgage loans for bad credit - What you need to know
  14. Bad Credit Loans Online: Providing the Technical Edge
  15. Bad Credit Secured Loan for your Better Credit Score
  16. Loans for the defaulter
  17. Reason Your Credit Scores Still Go Down When You Do Everything Right
  18. Cheap Bad Credit Loans: Test Your Own Credibility!
  19. What is a Credit Score?
  20. Unsecured Loans: Why to put your home at stake?
  21. Bankruptcy Mortgages - Get a Mortgage after Bankruptcy Discharge
  22. Bad Credit Secured Loans: Not That 'Bad' Afterall
  23. Bankruptcy Alternative
  24. Unsecured Loans a safer tomorrow
  25. Mortgages From the Past and the Present
  26. Bad Credit Payday Loans: There 'ARE' Loans That Do Not Involve A Credit Check!!
  27. Loans for bad credit help rebound your credit
  28. CCJs Mortgage - Finding the Best Deals for a CCJs Mortgage Problem
  29. How To Apply For A Mortgage If You Have A Low Credit Score
  30. Let Your Home Fetch You Money- Go For Secured Homeowner Loans
Latest...
  1. Mortgage Finance-3 Hot Tips to Avoid Lowering Your FICO Score
  2. Do You Know Your FICO
  3. FICO Scores, Credit Repair and Home Loans - The Real Truth
  4. Improve Your FICO Score with Student Loan Consolidation
  5. How to Understand your FICO Score
  6. Mortgage loans Obtaining Mortgage Loans Depends on FICO scores
  7. How FICO Can Determine Your Home Loan Approval
  8. Three Strategies to Improve Your FICO Score
  9. What's in Your FICO Score?
  10. Poor Credit Home Mortgage Loans - The Role Of The FICO Score

© Edge of Bankruptcy 2008. All Rights Reserved