4/1/2021 0 Comments What is Your FICO Score? A credit score, also known as a FICO score, is a numerical value calculated on an individual's credit reports, to reflect an individual's creditworthiness. Typically, a credit score is based on information typically obtained from credit agencies. A credit score calculation is made through the utilization of several different credit factors. These factors are, an individual's payment history, the amount of available credit they have available to them, and the types of credit they have available to them. The formulas that are used to come up with a credit score, is not really that difficult. It's just a matter of plugging in your information, which in this case would be your credit score, and it spit out what a credit score would look like for you. If you have doubts as to your credit score, then it would probably be a good idea to get a copy of your credit report, and do your own investigation. In fact, if you are currently under a dispute or are having credit issues with your current lender, it would probably be wise to get your own copy of your credit score as well. In order to determine your FICO score, there are several factors that are used. These factors, in turn, are dependent on how often you make your payments on time, and whether or not you pay your bills on time or behind the required date. The most commonly used factors are your payment history, the amount of available credit that you have available to you, and the types of credit that you have available to you. Let's take a look at each of these in more detail. Find out more info about credit score status on this finance blog. Payment history, more often than not, is the largest part of credit scores. This is important because, when you make a payment on time, it shows that you will pay your bills on time. It also shows that you have an adequate budget. A common problem amongst many credit cards and consumers is the tendency for people to close credit cards when they are maxed out, and it also usually indicates that they may not have another available card to use for emergencies, such as car problems, medical issues, etc. Closing credit cards can cause a drop in your overall score, which is why many consumers feel the need to close as many credit cards as possible, in order to maintain a better score. Another important factor that is used to determine your FICO score is the amount of debt you have versus the amount of available credit that you have. When you have a large amount of unsecured debt, lenders use a different standard when determining credit scores. This debt burden is determined by the ratio of total debt to available credit. If this ratio is high, or the score is too low, lenders are less likely to issue credit, and it can also indicate that you are not able to manage your debt properly. Because it has been shown that credit scores are often influenced by debt burdens, many credit card companies will offer special offers for people who want to lower their debt burden. However, in order to be effective, these offers must be followed through in order to avoid paying late fees, which can further decrease your score. Visit this personal finance site for more details relating to financial matters. The final factor that is used to determine your FICO score is your credit utilization ratio. Credit utilization, or the ratio of available credit to the total amount of debt owed, is a much more complicated calculation than debt to income ratio. Rather than just looking at the amount of debt owed, credit utilization actually factors in the amount of available credit that is being used, as well as how effectively that credit is being utilized. If the ratio is high, this means that consumers are using their credit cards, or borrowing money from lenders, too frequently, and that negatively affects their score. To improve this ratio, consumers can choose to pay down their debts, or stop paying their balances altogether. Alternatively, they can consolidate their debt, get a better rate, or stop paying any of their balances at all. Knowledge is power and so you would like to top up what you have learned in this article at https://www.huffpost.com/entry/credit-repair-companies-services-scam_l_5cb76f22e4b09dc528cd1b9b.
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