FICO Score FAQs and FICO Score Deduction Points

credit-score-chart

FICO Score is a number that helps lenders decide: if I give this person a loan or credit card, how likely is it that I will be paid on time? A FICO Score is a snap shot of your credit risk picture at a particular point in time. The higher your score, the lower is the risk to lenders. Fair Issac Corporation develops the mathematical formulas used to produce FICO scores. Check out the FICO Score FAQs

How can I improve my FICO score?
Your FICO score analysis will suggest things you can do to improve your score over time. Genrally people with high FICO scores consistently:
• Pay bills on time
• Keep balances low on credit cards and other revolving credit products
• Apply for and open new credit accounts only as needed

What is the most important factor in a FICO score?
FICO scores take into consideration five main types of credit information. Listed from the most to the least important are:
Payment history
Amount owed
Length of credit history
New credit
Types of credit in use

Do insurance companies look at FICO credit scores?
No FICO credit scores predict credit risk-the risk that you will be late on future payments for loans, credit cads or other credit card products; these do not insurers Insurance companies use a different product commonly called an insurance score. Insurance sc9ores help insurers predict the likelihood and severity of a person’s future insurance clams and losses. Since insurance scores are calculated from information in your credit report, they are sometimes erroneously called credit scores., which can be confusing,

FICO credit scores ignore
Your race, color, religion, national origin, sex or marital status
Your age
Your salary, occupation, title, employer, date employed or employment history
Your residence
Any interest rate being charged on a particular credit card or other account
Certain types of inquiries like promotion account review, insurance or employment related inquires
Credit counseling
Any information found in your credit report
Any information that is n o proven to be predictive of future credit performance
What is a good FICO score?
Since there is no minimum score used by all lenders, it is hard to say what a good score is outside the context of a particular lending decision. Your lender may be able to give you guidance no the criteria of a given credit product

How often does my score change?
The FICO sore is calculated based on the latest snapshort of information contained in your credit report at the time the score is requested. So your FICO score a month ago is probably not the same score a lender would get from the consumer reporting agency today. Fluctuations of a new poins from month to month are quite common

How are FICO scores calculated?

Very FICO sore is calculated at a consumer reporting agency using a mathematical formula that evaluated many types information on your credit report at that agency. By comparing your information to the pattern of your past credit reports, the score identifies your level of future credit risk
What are the highest and lowest FICO scores?
FICO scores range from 300 to 850. The higher the sore, the lower the predicted credit risk for lenders

Why do lenders use FICO scores?
Credit scores give lenders a fast, objective and impartial snapshot of a person’s credit risk based on their credit history. That is why lender use FICO credit scores when making credit decisions. The higher the individual’s score, the lower the risk to lenders when extending new credit to that person

Does everyone have a FICO score?
For a FICO score to be calculated on your credit report, the report must contain at least one account which has been open for six months or longer. In addition, the report must contain at least one account that has been updated in the past months. This ensures that there is enough information and enough recent information in your report to compute an accurate credit score.

Whenever you max out a credit card or open a new credit card account, you are hurting your FICO credit score. FICO, the company that created credit score shows how FICO works practically and how the deductions in FICO takes place.Every person’s credit file is affected depending on how many credit cards, debt, loans etc he or she has. Look at the diagram:

fico-score-points-deduction

Also, each individual’s credit profile will be affected differently depending on how many credit cards, loans, etc., they have. You may be tempted to take a new credit card but think again, a ten percent discount on you card can cost you more if the FICO score goes low

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Posted by Starwin on 23rd April, 2010

FICO Score FAQs and FICO Score Deduction Points

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