Credit Scoring
Understanding FICO scores
- FICO scores are your credit rating
- Most lenders base approval on them
- They range from 300-850, higher is better
- Higher scores mean lower interest rates
FICO scores are calculated based on your rating in five general categories
- Missing payments (regardless of $ amounts . . . It takes 24 months to restore credit of one late pay)
- Credit cards at capacity (i.e. maxing out credit cards)
- Closing credit cards out
- Shopping for credit excessively
- Opening up numerous trades in a short time period
- Having more revolving loans in relation to installment loans
- Borrowing from finance companies
- Transferring balances
