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Understanding Your Credit For most people, credit is a scary mystery. Everyone knows good credit is important, but how exactly are scores calculated? What does FICO mean?
FICO is a formula used to measure a person's ability to repay debt based on average patterns of repayment ability.
35% Payment History:
If you have a history of being diligent on payments, your credit score will be penalized significantly.
30% Amount owed:
If you owe a significant amount of debt, your credit score will be penalized.
15% Length of Credit History:
It's important to show you have a history of established credit. If you haven't had a lot of credit, you're credit score will be penalized.
10% Types of cards used:
It's important to show you use a variety of credit, such as a car loan, home loan, and 2-4 credit cards. If all of your credit is one area, for example, credit cards, your score will be penalized.
10% New credit:
If you have new credit on your account, your FICO score will be penalized. Creditors like to see a payment history for outstanding credit.
FICO Credit scores range from 350-850 and are rated as follows:
750 - 850 Excellent credit
660 - 749 Good Credit
620 - 659 Fair Credit
350 – 619 Poor Credit
It's important that you review your credit once a year to monitor
Please contact us today for a complementary credit analysis.