DOES A CREDIT CARD FICO SCORE HELP?
Increasing your credit score is like losing weight. It takes time and there is no quick fix. In fact, quick-fix efforts always backfire. The best advice is to manage credit responsibly over time.
What is a FICO score?
A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. Fair, Isaac & Co. and the credit bureaus are not letting out the method used to arrive at the score. Since the Federal Trade Commission has accepted this method, no one is questioning. A borrower’s strength and ability to return the loan is determined by this single number.
Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information which best predict future credit performance. Developing these models involves studying how millions of people have used credit. Score-model developers find predictive factors in the data that have proven to indicate future credit performance. Models can be developed from different sources of data. Credit-bureau models are developed from information available with consumer credit-bureau reports. Credit scores analyze a borrower's credit history considering numerous factors such as: Payment patterns for late payment and late fees. The number of years the credit has been available to you. The amount of credit used versus the amount of credit available. How much time you have resided in one place as place of residence matters to see if you can be contacted easily and negative credit information such as bankruptcies, charge-offs collections, etc. There are really three FICO scores computed by data provided by each of the three bureaus––Experian, Trans Union and Equifax. Some lenders use one of these three scores, while other lenders may use the middle score.
To avail a credit card, your present employment, income levels and tax returns are enough. These can establish your credibility. Along with this if FICO score is a good four hundred and fifty and above then chances are bright for you to secure a loan. Almost all the financial institutions and banks use FICO score to lend money. This establishes your credibility. If you have a good FICO credit score then your chances of getting a loan at reasonable interest rates is likely. This single number speaks volumes about your credit worthiness. The best way to improve your score is to pay your bills on time and keep your credit card usage to the minimum. Do not have a back log on payment. Not having sufficient credit can negatively impact your score. This score can open the doors to money and is a gateway to wealth.
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