| If you are looking to buy a home, car or any | | | | estate or automobile loans. It is now the 21st |
| major appliance and you are applying for credit, | | | | century and approving credit has become almost |
| lenders are very interested in checking out your | | | | instantaneous. The computer, on line, has been |
| credit report to verify your credit worthiness. The | | | | able to generate approvals or denials of credit in |
| most important thing these days that they look | | | | almost all areas where credit is involved within |
| at is your FICO score. Most people have | | | | seconds to a minute or two. In short, lower credit |
| absolutely no idea what a FICO score is and | | | | scores require a more thorough review than |
| usually are trying to find a definition of this term. | | | | higher scores. Often, mortgage lenders will not |
| When a credit report is generated for something | | | | even consider a score below 600. Items that |
| like, for example, a new car, a score is generated | | | | determine your FICO score include but are not |
| when it is submitted. There are many ways that | | | | limited to the following: |
| a score is generated. This includes whether your | | | | Late Payments. |
| accounts such as credit cards, loans and other | | | | To much "new" credit activity within a twelve |
| credit items are paid on a timely basis. Once the | | | | month period (recent). |
| credit score is generated, it displays on the | | | | Limited credit experience. |
| merchant's computer screen and can be printed | | | | Maxing out on credit cards or other revolving |
| out. Scores vary from a low of about 300 to a | | | | credit. |
| much higher level over 800. | | | | Judgments, bankruptcy or tax liens not satisfied. |
| A study was conducted to determine the | | | | Zero balances on credit cards or revolving credit |
| relationship of credit scores and general paying | | | | of any type. Credit inquiries that are too |
| habits. It was found that people with scores | | | | numerous. Not enough credit cards on record. |
| beyond 680 generally made timely payments with | | | | Revolving credit in excess of average consumer |
| very few, if any, late payments. It was also | | | | usage. The definition of the word FICO is Fair |
| discovered in this study that people who scored | | | | Isaac and Company. TRW, a company of the |
| below the 600 level were much more of a risk | | | | past was taken over by Experian. Experian uses |
| and likely to run into payment difficulty. Due to | | | | this FICO method exclusively. Other companies |
| this study, a greater probability of accuracy was | | | | such as Equifax and Trans-Union also use a |
| engendered when approving, for example, real | | | | scoring system. |