FICO Scores and How Lenders
See Them
You probably have some idea that your credit is based on
a score, but you might not know what kind of score or how
it is calculated. However, if you don’t know this information
you need to learn because your credit score impacts your life
n more ways than you know.
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First of all, your credit score is also known as your FICO
score, which stands for Fair Isaac and Company. The FICO score
has a range from 300-850, depending on your credit. The more
credit worthy you are the higher the score and the less credit
worthy the lower your score. However, you need to know your
credit worthiness and how it stacks up with the types of FICO
scores lenders are looking for.
Too many people have decided it was time to
buy a home or car and showed up at the bank to apply for a
loan only to be surprised that they did not qualify for the
loan because their FICO score was too low. Because of this,
you need to learn what your FICO score is at each of the three
bureaus before applying for any major loans. That way, if
you have a low score, incorrect information, or anything else
negative on your report you have a chance to try and correct
it before you apply for a loan. When you are prepared going
into a loan application process and the loan officer looks
up your credit information you won’t be surprised at
the number that is returned by the credit bureau. Now that
you know how to find out about your score and be prepared
for the lending process you need to know what scores lenders
are looking for and their reactions to other scores.
When your loan officer looks up your FICO credit score he
is hoping that you have a score of around 700 or above. This
means that you are considered very credit worthy and are low
risk, which means the loan will most likely go through with
no problem making his job much easier. Anything from 700-850
is considered excellent and if you have credit in this range
you will receive all types of low interest rates, no money
down, and other great incentives. However, once your FICO
credit score slips below 700 you will find lenders are not
as excited to lend to you simply because you are in a higher
risk category. While a score of 680 generally can slide with
the 700 FICO score crowd, if you have a score between 640-680
you will more than likely be able to receive a loan, it will
just require a little more effort, maybe higher interest rates,
and more money down. However, this is not a bad credit score
and does not usually cause many problems. If your score is
between 600-640 you will find that lenders are very cautious
and many will not approve your loan. Most of the time if you
have a credit score in this range you will need to use a private
lender that specializes in less than perfect credit loans.
Anything below 600 is not completely hopeless, but the percentage
chance you have of receiving a loan with a FICO score of less
than 600 is very slim.
Knowing this information before you begin your loan application
process will help you avoid any surprises as well as the embarrassment
of being turned down for a loan. Also, you will have the chance
to beef up your score before you apply for any major loan
so that when the lender sees your score he will simply smile
and ask you to sign on the dotted line.
Part 2: What Comprises
My FICO Credit Card Score?
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