Do you nothing else but know what a Fico score is and how its worked out? Even if you do know what it is it can be leading to understand something about how it is calculated because then you can improve upon your current score thus improving your capability to gain credit and to gain credit on good terms too. The name "Fico" comes from a firm named Fair, Isaac and Company, and it is used to compare credit worthiness of a consumer.
In North America, all lending activities are recorded by three major clubs - Equifax, Experian and Trans Union. This data then goes into production up the Fico score which is based upon a scale of between 300 and 850. This score is used by other clubs in assessing your capability to pay back credit. Such clubs may range from insurance to credit card clubs and even now a days - possible employers.
The measurement of the actual score is carried out as follows:
- The payment history of the consumer. This makes up over a third of the whole score. So, if for example a buyer has made some late payments to pay off credit or maybe even defaulted on some payments then this will very much go against their record. If on the other hand the records show quite the opposite and all payments have been made in a timely manner, then the Fico score will reflect this.
- Current debt. Just below a third of the total Fico score is made up of the current debt value. It is a ratio between current debt and whole of credit available. So if the consumer's credit cards are all maxed out then the Fico score will reflect this.
- The last three aspects to the Fico score are the length of credit history, the type of credit and the up-to-date applications for credit. credit history will tend to weigh more in your favor if you are older. The type of credit is nothing else but best if the buyer has a variety of credit on record. So here for example, if the buyer were to have 2 credit cards and a car loan its best than having lots of credit cards. up-to-date credit means that when there are signs that a buyer has applied for a variety of credit in the very up-to-date past it does not necessarily reflect well upon the final Fico score as it appears that they are somewhat desperate.
The above points add up to make 100% of what we know as the Fico score. Hopefully you can use this data to improve your own score and thus gain the credit you would like with the terms and conditions to match.
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