Loans Guide


eg: UK or Brides UK or Classical Art or Buy Music or Spirituality

Business & Money

Technology

Women

Health

Education

Family

Travel

Cars

Entertainment

Featured Sites

Does My Credit Score Mean

View:

When you fill out an application for a mortgage, car loan or even a credit card, lenders will consult your credit score to determine whether you are an acceptable risk. While this may sound harsh and uncaring, the premise behind a credit score is to help place all borrowers on equal footing using a broad sampling to determine proper credit risk.

Determining Factors

Credit scoring models use several methods of determining your ability to repay a loan. The first method is timely bill payment. If you are late or delinquent in bill paying it affects your credit score.

Companies extending credit will also look for those who have an established credit history. If you have little credit history to draw from there may also be a reduction in your credit score.

Having significant outstanding debt can have a negative effect on your credit score. If you have a credit card that is nearly maxed out, your credit score may be reduced.

Companies may look to see how long it has been since you last applied for new credit. If you routinely apply for credit it can also be factored into credit scores.

Multiple credit card accounts can also provide a negative impact on your credit score. Loans from a finance company may also be viewed negatively in conjunction with your credit score.

Other Factors to be Considered

There are several additional variables that are considered in arriving at your individual credit score. These can include such things as length of employment, home ownership and type of job you currently have.

The higher your credit score the better chance you have of being granted credit that includes lower interest and better terms.

Should your credit score be border line, an application will generally be reviewed by a personal loan officer for final determination.

If Your Loan is Not Approved

If you are denied because your credit score is too low, you have the right to ask specifically why the credit was not approved. Companies that specialize in loans are required by law to provide specific details regarding loan denial.

Does My Credit Score Mean

You might ask yourself these questions. The general rule is the higher the FICO score the better and if it is high you could wind up saving lots of money. When lenders decide to give you a loan, your FICO score is used as an indication of risk. The lesser risk you are, the lower the interest rate you will have to pay. The lower the interest rate, the more money you will save over the life of a loan.

The FICO Score range is 300 to 850 and it is broken down as:

?300 ? 499 bad credit,

?500 ? 619 low credit,

?620 ? 679 average credit,

?680 ? 699 good credit,

?700 ? 850 excellent credit.

An example of how this will save you money is to look at a 30 year mortgage. With Person A having an excellent FICO score and Person B having an average score. When Person A applies for a $200,000 30 year mortgage they get a very nice interest rate around 6 % and a monthly payment around $1200. When Person B applies for the same loan, they get an interest rate around 7.5% and a monthly payment of $1400. The difference is $200 per month. This does seem like much, but it really is. Over the life of the loan, 360 months at $200 per month, it equals $72,000. That is a huge savings by Person A.

Furthermore, if Person B had any lower of a FICO score, they more than likely would not even get a loan. 620 is often used as a cut off point by lenders. This means if you are below that most institutions won't touch you and you will have to borrow from a sub prime lender. The interest rates provided by this group of lenders is often much higher than even the average FICO score rate. You could pay in the double digits for interest, making the consequences of having a bad FICO score really costly.

You should always be looking to protect and increase your FICO score. From the example above, the $200 a month could really make a difference in a person's life. This is especially true if the money is invested. The person saving that $200 a month also has fewer worries. They have the flexibility to deal with changes in the economy and inflation.

Related Articles
Author
Most Popular

•	Affect My Credit Score, by John Rasor
•	Build My Credit Score, by Vince Shorb
•	Can I Check My Credit Score, by Juliet Sadler
•	Can I Improve My Credit Score, by Michael Wilson
•	Check My Credit Score, by William Brooks

About Author

Both Jp Burkhart & Kyle Gentile are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Jp Burkhart has sinced written about articles on various topics from Free Credit Report Score, Credit Loans and Free Credit Report Score. . Jp Burkhart's top article generates over 9900 views. Bookmark Jp Burkhart to your Favourites.

Kyle Gentile has sinced written about articles on various topics from Free Credit Report Score, Web Development and Debts Loans. To Find out more about, what is a good FICO score, read Kyle's blog FICO authority. Kyle Gentile's top article generates over 14800 views. Bookmark Kyle Gentile to your Favourites.

Air Force Ones 1
The shoes are specially built to cater to these movements. You dont want to be wearing a pair of indoor court shoes to run a marathon. That will do more harm than good