Understading your Credit Report 2.

Understanding your Credit Report 2

Do you know what your FICO score is? Many people hear that their FICO score is a three digit number but they don't really know what this means. Your FICO score is a rating based on your credit score. When your FICO score is determined there are many different pieces of information that are considered. Some of the things that come together to create your FICO score include payment history, length of credit history, new credit, different types of credit used, and the amount that is still owed. Several different factors are considered in reference to all of these things. When you break each down and understand it for what it is, you will have a better understanding of your FICO score and how it came about.

Your Payment History
When you hear that your payment history is considered you may not know exactly what this means. There are many things that are considered in relation to your payment history including the payment information that is available on credit card accounts, retail store accounts, loans, mortgages, and other financing resources. In addition, events such as bankruptcies, wage garnishments, and suits filed against you will be factored into the equation. Lastly, your FICO score is based on how long your debts have been overdue.

Your Total Amount Due
When your FICO score is being determined how much you owe will also be considered. Many different things will be looked at including the amount that is owed on any specific accounts, how many accounts you currently owe on, and also the amount of credit that is owed on all of your credit lines. This gives one a good picture of how well you are able and willing to pay off your current debts and your FICO score is a reflection of this.

Length of Your Credit History
The length of your credit history is also important when determining your FICO score. What will be looked at includes how long you have had your accounts and the amount of time there has been since the accounts were last active. This is an important part of your FICO score because it shows not only how much credit you current have, but how active you are in purchasing as well as making payments.

Your New Credit
Your new credit is also important when considering your FICO score. There are a couple of different things that will be considered including how many new accounts you have as well as how many different credit inquiries you have made in the recent past. This determining factor because it allows for a lender to see how much credit you have been applying for lately.

Types of Credit Used
The type of credit that you have used is also considered when your FICO score is being figured. Your FICO score is partly based on the type of credit accounts you have and how many of them you currently have open. The credit types that are inquired about include mortgages, loans, credit cards, and department store accounts.

When you put all of this information together you have your FICO score. The greater your FICO score the easier you will find that it is to be approved for a loan or credit of any sort. Your FICO score is used to help determine the risk on the part of the lender when loaning you any amount of money.

Understanding Your Credit Score

There are some simple things that you should know about how the FICO scoring system is used. First, if your FICO score is less than 600 you are usually considered to have bad credit. If your score is between 620 and 659 you usually are considered to have good credit, 669 to 700 is considered very good, and 720 and above are considered excellent. The better your credit score the your chances of being approved and also the better you're your interest rate will be