How Is Fico Determined

Home Loans

How Is Fico Determined
(presented by www.refinance-refinance.net - mortgage lenders)

By Jack Tanner

Asking, “How is FICO determined” is a good idea before applying for a loan or mortgage.

FICO is your individual financial score card. The initials stand for Fair Isaac Corporation, which is the firm that designed this commonly used credit score determination software.

If you want higher credit levels and lower interest rates, you need to up your FICO.

Scores range from 300 to 850. Higher scores mean greater creditworthiness. Scores over 750 are excellent, over 720 very good and over 660 acceptable.

Anything under 660 is considered questionable or risky. The average score is about 715.

A person with a score of 620 or less will probably pay about 1.5% more in interest than someone with a score of 760 or higher. Depending on the principle of the loan involved, that could add up to hundreds of dollars a month in extra payments.

This is why it’s important to keep your FICO score as high as possible.

Five basic financial factors are used to determine your score: payment history, debt to credit ratio, length of time of accounts, number and type of accounts and number of recently opened accounts and inquiries.

(Article continues below)

HOME LOANS ADVERTISEMENT

If you do what you can to score as high as possible in each of these five categories, your overall score will be much higher, resulting in better credit and lower interest rates.

The first thing considered is your payment history. It counts for about 35% of your total score. The amounts you regularly pay on accounts, past due payments and length of time to get up to date are all considered.
So it’s important to pay all overdue accounts and, if possible, get late payments erased from your file before applying for credit.

Second in importance is your current outstanding debt to credit ratio. This adds up to about 30% of your total score. You can do two things to improve your rating in this area: pay down outstanding debt and/or get lenders to increase your credit limit. They’ll usually do this if you’re in good standing.

How long you

===========================================
For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
===========================================

This entry was posted on Saturday, December 30th, 2006 at 8:22 am and is filed under Refinance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

Comments are closed.