What's In Your FICO Score?
Obtaining copies of your credit reports from the three major
credit reporting bureaus is a must for all American consumers.
If you order your copies directly from each bureau, you can get
yours for free [once per year per bureau]. That is the law.
There is, however, one piece of information not included with
your credit reports and that is your FICO score. Your FICO score
can determine several things, including what interest rate
mortgage lenders will charge you and the rate you will pay for
your credit cards. For just a small fee you can order your FICO
score and get a hold of a piece of information that is critical
to you fully understanding and improving your credit rating.
FICO, or Fair Isaac Corporation, is a score that helps determine
what interest rate creditors will charge you. The higher your
score, the lower your interest rate will be resulting in lower
mortgage payments and more money for you. Indeed, when you apply
for a new cell phone account, purchase a car, or make just about
any type of credit application, your FICO score is obtained by
creditors. Unfortunately, you typically do not know what that
score is unless you get the information yourself. Don't count on
creditors sharing that information with you!
Your FICO score is based on five determining factors. According
to the Fair Isaac Corporation, these five factors are weighted
differently and each one is assigned a percentage figure based
on their importance. Specifically, they are:
1. Payment History - 35%
2. Outstanding Balances - 30%
3. Length of Credit History - 15%
4. New Credit - 10%
5. Types of Credit Used - 10%
Obviously, if you have made several late payments and owe a
large amount of money to your creditors, your FICO score will be
much lower than the person who pays what they owe on time, has a
manageable level of debt, and possesses a solid credit history.
Coupled with your credit report, your FICO score can help you
determine the plan of attack you need to take to improve your
credit standing. This is very important step to take especially
if you anticipate making any sort of credit application within
the next year. If there are errors in your credit report than
these will lower your FICO score. Make certain that the three
credit reporting bureaus correct each error now and, once
amended, run your FICO score again to determine if it has been
adjusted upwards.
Remember, the higher your FICO score, the lower your monthly
payments will be on virtually everything you finance through a
creditor. Order your free credit report today and pay a little
extra to obtain your FICO score.