Learn About Credit - What Is FICO
If you want to learn about credit, you probably want to learn your credit score which is computed by the Fair Isaac Corporation. You have probably heard something about credit scores as they are often discussed online and on television. Prior to tihe 1990s, no one knew what a credit score was. Today, everyone is worried about their credit score.
Credit scores are an easy benchmark that determine whether you are credit worthy. There are several factors that figure into your FICO score. They include your past credit history, how much you currently owe in debt, the type of credit you have and how many credit applications that you fill out. All of these affect your credit score.
The more credit applications you fill out, the worse it is for your credit score. This is because you are deemed less credit worthy the more credit that you have. Lenders realize that you can only afford to pay back so much so if you have tons of credit cards, they realize that you may not be able to pay theirs back. Filling out a lot of credit card applications damages your credit score. Only apply for credit that you need.
How long have you had credit? This is important. If you have been paying your credit card payments on time for the past 20 years, you are obviously going to have a higher credit score than someone who is just starting out with credit. One thing that you should learn about credit is that you should never cancel a credit card that you have been paying on a timely basis. This is because it ends up helping your credit score.
How much money do you currently owe? The lender will look at what you currently owe and what you make when making a determination on how credit worthy you are. If you do not owe a lot of money, your credit score will be higher than if you are financed to the hilt. The amount of money that you currently owe figures into your FICO score.
What type of credit do you have? A mortgage is better than a credit card. A credit card such as a Visa or Mastercard is better than store credit which is easy to get. Car loans are good credit for the credit score. The FICO will look at what type of credit you have and how you have been paying it off.
All of these matters figure into your FICO credit score. People who have a good credit score have one over 750. Credit scores range from 400 to 800 in the United States with most people falling in the 500-600 range. The higher your credit score, the more credit worthy you are and the more credit you will be able to get.
When you learn about credit, you may want to discover your own FICO credit score. You may be surprised to find that you are more credit worthy than you imagined.