The following helps you in understanding credit scores so that you can calculate your own credit score. You might know that FICO (Fair Isaac and Company) maintains three scores out of which, one or more is used to determine:
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What amount will different lenders be willing to lend you
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If they (the lenders) decide to lend money to you, what would be the interest amount
In case you are applying for credit cards, your credit limit also depends on one of the three scores maintained by FICO.
How Do You Know If You Have A Credit Score?
If answer to any of the following questions is true, chances of you having a credit score are high:
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Did you or do you have a credit card?
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Did you rent out your apartment with a legal copy of agreement?
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Did you obtain any of the public utilities on your own name?
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Did you buy a phone connection?
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Did you ever asked for loan that used a legal agreement?
Factors of FICO Score
As mentioned above, FICO employs three scores to determine your credit rating. These scores come from: EquiFAX, Experian and TransUnion. Before discussing the factors of credit score, you should know that in order to your credit score be calculated you need to have at least six month old working bank account. The above credit bureaus have to include data from the bank account into the scores.
The factors that determine your FICO score are:
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Payment History: on loans from different lenders, including credit card and utilities
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Amount Owed: to different lenders. However, this does not mean that you will have a bad score if you own a lot to people and institutions
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Length Of Credit History: This factor depends on how soon or slower you repaid loans in the past
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New Credit: This includes credit score requests from lenders. If the number is high, the credit score will show a dip in total ratings
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Types Of Credit Currently Owned: mortgages, credit cards, banks, private lenders etc. The nature of current loans is a high determining factor in your overall scores
This should help in understanding credit scores. Several institutions across the Internet offer you your real credit score, a facility that you can avail for a small free.
