FICO Score Report Determines Your Creditworthiness

2007-03-08 10:33:40

( Financial )



Perhaps you know that creditors check your credit reports to assess whether or not to grant you credit. Be aware that in addition to credit reports, creditors look at FICO score reports to determine your creditworthiness.

FICO score reports are based on credit reports that your creditors send to FICO. FICO then uses computer models (based on thousands of successful and unsuccessful borrowers) to evaluate your credit reports and generate an opinion in the form of a score between 350 and 900.

Knowing your FICO score report and what affects it is important. If you receive higher marks on your FICO score report, the more likely that you will get a good financing and a lower interest rate.

Your payment history, outstanding debt, length of your credit history, recent inquiries on your report and types of credit in use are the factors that affect your FICO score report.

Late or missed payments on your bills and a bankruptcy report can hurt your FICO score report. If you did miss some payments more than seven years ago, these lapses will no longer appear in your credit reports and thus, will not affect the debt ratings shown on your FICO score report. However, a bankruptcy report during the last ten years can stay on your credit reports.

Your debt-to-income ratio is critical. Owning many credit cards with large credit lines could also affect your FICO score report because lenders think that you will easily accumulate debt merely by using your existing card credit lines. You will get good FICO score report if you have established credit for quite some time. But note that more credit inquiries can affect your score adversely.

If you want to know how you score even before you apply for any credit, you may want to order your FICO score report for a minimal fee.


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