Your ability to qualify for any kind of financing - from credit cards to auto loans to mortgages, depends greatly on credit scoring. Most creditors will draw your credit report to look at your FICO score.
The FICO score will be used to evaluate your qualification for a particular credit line or loan program and to calculate the applicable interest rate. Depending on their specific institutional needs, some lenders may use the highest FICO score or the middle score, or only one FICO credit score if the credit transaction is for a consumer purchase.
For instance, if you were to apply for a house credit card at a department store Parley x adidas Ultra Boost ST Carbon Blue Men's UK , they would run your credit profile (with your permission, of course) to obtain a FICO score. On the assumption that the store reports to only one of the three credit bureaus ? as most department stores tend to do -, then the inquiry will go only to that bureau. The store would make its decision based on only one bureau?s information, and by using only the one FICO score.
The system works differently for mortgage credit. Banks report to all three credit bureaus (Experian, Equifax and Trans Union) Adidas Ultra Boost Pure White UK , so they would get three different FICO scores, calculated on three credit reports that the credit bureaus sent for scoring by FICO. Since there are three FICO scores, banks generally will use the middle or average FICO score. Depending on the type of financing you are seeking, whether it is for a new car, appliances Men's Adidas Ultra Boost Laceless Black UK , a credit card, or a home mortgage, your FICO score makes up a significant portion of the decision-making process. The FICO score will determine the premium rates you pay for insurance and the interest rate available to you on a loan.
Your FICO score is usually a composite of the following:
35% of your FICO score is payment history, and the key items include frequency, severity Men's Adidas Ultra Boost Clima Grey UK , and most recent occurrences of non-payment ? which means that all late or missed payments will hurt your FICO credit score, but missed payments of more recent dates will have bigger effect;
30% of the FICO score is credit utilization, and estimates the balance of credit accounts in relation to the maximum credit available, with revolving credit lines (usually, credit card accounts) being the most significant;
15% of FICO scores cover credit history Adidas Ultra Boost Uncaged Base Men's Green Black UK , the number of years credit has been established (the longer, the better; and one trade credit line for 5 years will affect the FICO credit score better than 2 trade lines for 6 months);
10% of the FICO score involves type of credit, which will monitor the mix of revolving credit inquiries, but will not include inquiries with no finance rating (as an inquiry from your employer, for instance).
As mentioned earlier Adidas Ultra Boost Uncaged SOLEBOX Grey Red UK , there are three FICO scores developed by the Fair Isaac Company ? one each from the three major credit bureaus. Experian has the ExperianFair Isaac Risk Model; Equifax has Beacon; and, Trans Union has Empirica. Consumers are likely to have a different rating with each agency, because although they all use the FICO model, each credit reporting bureau has its own set of reporting companies and there may be variations in the credit information that they send for calculation of FICO score.
There are other types of FICO scores:
???????????? Application Risk Score ? In this set-up, the lender uses a scoring system that includes a FICO score but also considers information extracted directly from your credit application.
???????????? Customer Risk Score ? Also called ?behavior scores?; here Adidas Ultra Boost ATR Mid Triple White Men's UK , a lender may use the scores to make credit decisions on its current customers; this score uses the FICO score and also information on your payment history with that lender.
The range on your FICO score is from 300 to above 850 and would suggest a credit profile as follows:
FICO score 720 and above: This is a very good FICO score, and it suggests that the risk of default on your credit is very low. If the lender should find any exceptions in your credit report, these will easily be waived and set aside; and if there are any weaknesses in underwriting your credit, your high FICO credit score favorably compensates for that weakness.
FICO score 660 to 719: This is also a good FICO score, and suggests that your risk of default is low. This FICO credit score indicates that your credit history is acceptable.
FICO score 620 to 659: This FICO credit score represents a degree of risk. You can qualify for 100% financing Adidas Ultra Boost 2.0 ATR Glow in the Dark Grey Green UK , but certain conditions may be included in the credit agreement. The credit underwriter will more than likely consider you, but will investigate further to check whether you are: recently self-employed; have high loan to value ratios; have low cash reserves; exceeding normal debt to income ratios; staying in multiple dwelling unit properties.
FICO Scores below 630:? Anything below 630 is a really bad FICO score. Your risk of default is very high, and you will need to present strong compensating factors to minimize credit risk before the underwriter would consider approving a loan. Some lenders may be willing to arrange 100% financing.
FICO score between 619 to 585: The underwriter can consider approving a loan but that depends on the credit issues, and may also consider an applicant with no previous delinquency and lack sufficient credit. Lenders are more likely to see mortgage delinquencies if they loan money to a consumer with a FICO score below 620.
FICO score between 584 to 500: You will have to explain your credit history in writing, and will need to pay off some of your debts and other payables; the underwriter may still consider you acceptable but the high risk factors should not be layered.
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23.11.2019 03:19
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