FICO (Fair Isaac Company) scores are used by potential creditors to determine the financial trustworthiness of a consumer. Anyone who has a credit account has a FICO score. Consisting of five key elements, FICO scores give a good look at the previous credit history of a consumer.
Score Range
FICO scores generally range from 300 to 850. The lower the score the more negative a FICO score is considered. FICO scores can change at any given time as a result of consumer behavior.
Payment History
The largest percentage of the FICO score (35 percent) is based on payment history. Payment history indicates if payments to creditors were made and made on-time. If a consumer is past due or has paid on time, it will be reflected in the FICO score.
Amounts Owed
The next largest factor in a FICO score is the total of amounts owed on outstanding credit. This component makes up 30 percent. The amounts owed on all credit as well as the amount of available credit are included in this group.
Length of time
The amount of time that credit has been maintained makes up 15 percent of the credit score.
New Credit and Types of Credit
The remaining 20 percent of the FICO score is divided evenly between new credit and the particular types of credit used by the consumer.
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