CARMEN'S REDMOND / SAMMAMISH BLOG

Redmond/Sammamish Blog

Week 5
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February 9, 2007

FRI

FEB

2007

EXACTLY HOW IS YOUR CREDIT SCORE DETERMINED?

By Carmen

Since I am in the Real Estate business, my friends, clients, and acquaintances often ask me about how their credit score is figured out. This is really a question that should be asked to someone in the mortgage industry, but this following is what I understand.

Your credit score is also known as your FICO score. FICO stands for Fair Isaac Corporation who were responsible for developing credit bureau risk scores. FICO scores are used by lenders to determine the credit risk of a prospective borrower or existing client in order to make credit and marketing desicions.

Here is how your score is determined: 35% of your score depends on how timely your are with paying back your debts and loans. Another 30% consists of how much you owe to lenders versus how much open credit you have. This is called utilization rate. For example if you owe $1,000 in a credit card but your credit limit is $10,000 then you are in okay shape but if you owe $8,000 and your credit limit is $10,000 then your score will be lower. Another 15% of the score depends on how long your credit history is. Then, 10% of your score will depend on what kind of debts you have - i.e. mortgage, department stores, etc. and the last 10% is determined by how much new credit you are seeking.

There are three major credit reporting agencies where all this data is accumulated, analyzed, and ultimately your score is generated.

As a consumer, you have the right to request your credit information to see if the information they have on your credit is correct. These agencies are required by law to provide toll free lines, staffed with real people during normal business hours to handle any complaints and to provide reports that can be read and understood. These reports are also free of charge.

It is very important that you check your credit report periodically so that mistakes can be corrected on time.

The three agencies where you can order your credit report are:

Equifax 1-800-378-2732 and 800-685-1111
Trans Union 1-800-851-2674 and 800-916-8800
Experian 1-800-422-4879 and 800-392-1122

For more information go to myfico.com

8:05 AM | Permalink | 2 comments

Comments (2) for "EXACTLY HOW IS YOUR CREDIT S...

I hope this article helps your clients who need to quickly raise their credit scores for the loan approval process or for the best possible interest rates.

<a href="http://www.creditips.com/blog/how-i-raised-my-credit-score-40-points-in-24hrs.html">How Credit Expert Frank Bruno Raised His Credit Score 40 Points in 24hrs.</a>

Also your clients may be interested in watching <a href="http://www.DisputeDemon.com">Free Credit Tip Videos here</a>

By Frank Bruno - 8/22/2007 10:17 AM

Thank you for this article. But, if a person needs in information about credit score he/she should use google.com or wikipedia.org to get a complete information about it.

By Pit - 12/2/2007 6:30 PM