What Is A FICO Score?

A credit score is most commonly known as a FICO score. FICO stands for Fair Isaacs Corporation. It's a company that developed the credit scoring software used to evaluate your credit worthiness.

Most lenders use the FICO score to determine whether they should extend to you a mortgage, car loan, credit cards and any other type of credit. The higher your score, the more credit worthy you are. Lenders will know that more than likely, you pay your bills on time. The lower your score, the more risk the lender takes on, guessing that you might not pay the loan on time.

The FICO score ranges from 300 to 850. More than likely, you'll end up paying a larger monthly payment on your mortgage if your score is below 650. Your credit score, according to MyFico.com, is determined by:

Payment history-35%

Amounts owed-30%

Length of credit history-15%

New credit-10%

And types of credit in use-10%

If you don't have any credit, your credit score can be lower than someone who has had a credit history for several years. When you personally check your credit often, this will not affect your credit score. When existing creditors review your credit, these inquiries are not counted in your score.

Since payment history is 35% of your score, you want to make sure you don't have a history of late payments on your credit report. The longer your credit history, the better. Having too many new credit accounts open can affect your score negatively.

The bottom line is that a higher FICO score means you are more credit worthy to potential lenders. The lower your score, the greater a risk you are to lenders and therefore, your monthly payments might be higher.

Michelle Roebuck provides mortgage and home buying advice for people with bad credit at http://www.find-bad-credit-mortgage-loans.com. Sign up for her newsletter at http://www.find-bad-credit-mort gage-loans.com/newsletter.html.

---

Your Credit Rating and How To Check It

There is a lot of confusion surrounding UK credit ratings,... Read More

Credit Counseling -- Why It Doesnt Work For Most Debtors

"Cut Your Payments in Half!" the headline screams. "Consolidate Your... Read More

How To Eliminate Credit Card Debt

There is almost nothing more troublesome than having too much... Read More

Keep Your Credit History Clean - Remove A Negative Credit Record From Credit Report

The three major credit bureaus, Experian, Equifax and Trans Union... Read More

Are 0% Credit Cards Reaching Their End?

Are Credit Card companies starting to feel the pinch? We... Read More

Its Your Credit - Take Care of It!

Thanks to the Fair and Accurate Credit Act, American consumers... Read More

Practical Suggestions for Protecting Yourself From Identity Theft

It's no surprise that thousands of Americans are victimized by... Read More

5 Ways To Prevent Credit Card Late Fees

Paying a credit card late fee is the same as... Read More

Identity Theft ? Who Would Want Mine?

With all my bills who would possibly want my credit?... Read More

Watch Out For Credit Repairs

It is very easy to find a site that is... Read More

How to Improve Your Credit Rating

So you got into debt, had problems but you got... Read More

Beginners Guide to Credit

I remember back when I was 18 and completely oblivious... Read More

What is a Credit Card?

A credit card allows you to buy things even though... Read More

What is a Credit Report?

Ever wondered what is a credit report? If you've ever... Read More

Choosing The Best Credit Card To Apply For

Always shop around to get the best deal when choosing... Read More

Saving Money: Quick Cash, High Cost

I didn't think it was possible. But it is. Folks,... Read More

Free Credit Reports - How to Maintain Your Credit Profile

Maintaining your Credit ProfileEvery consumer should be maintaining their credit... Read More

Making Sense of Credit Card Fees

In addition to the APR (annual percentage rate) and the... Read More

Common Credit Score Myths

A lot of credit score myths about fico score ratings... Read More

Good Credit Is a Necessity for Everyday Living

Most of us want a good credit report to obtain... Read More

Credit Traps Snag Consumers

Nearly 20 years ago I worked for a small consumer... Read More

Credit Reports ? Why Your Credit Score is Important

If you have never heard of a FICO score before,... Read More

Commercial Collections And Credit Granting

It is estimated that billions of dollars in delinquent commercial... Read More

Identity Theft ? Additional Protection for Soldiers on Active Duty

Congress passed the Fair Credit Reporting Act several years ago... Read More

3 Free Credit Reports For You

If you were to tell someone that they can have... Read More