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What does FICO mean?
FICO is an acronym for Fair Isaac Credit Organization, hence the
initials. Scores range from 400 to over 700 for great credit. Scores
are based on the following factors:
of the score is based on payment history. Late payments reduce
the score of course.
of the score is based on the amount of credit owed. Owing a
great deal of money could indicate the person is over-extended
and a poor risk.
of the score is based on the length of time credit has been
is based on whether the person is taking on new loans and if
they have a "healthy mix of loans". This is why too
many credit applications can reduce your FICO score.
How do I read my credit report?
have your consumer credit reports in hand, you should review them
carefully. The reports from each of the consumer credit reporting
agencies differ in format, clarity and completeness. Some are easier
to read and understand.
There are several critical pieces of information you should check
for in every report you receive:
that all of the information about your identity is correct.
Check to make sure there are no errors in your name, address,
current employment and social security number, or in any other
personal information such as your date of birth or the name of
sure that debts charged to you are truly yours. Check to make
sure that there are no accounts, debts, bankruptcies, tax liens
or other judgments that do not belong to you or are still listed
as open even though they have been resolved.
sure your payment history and balances are accurate.
that errors you successfully disputed have been corrected.
that information is accurate and not misleading. Make sure that
the status of your accounts is correct. Some accounts may be
inaccurately marked as delinquent or in collections.
sure that your information reported by each of the three bureaus
is complete and consistent.
How can I improve my credit report score?
improve ones credit score under most models,concentrate on paying bills on time, paying down
outstanding balances, and not taking on new debt. It's likely to
take some time to improve score significantly.
go buying furniture for your new home on credit shortly before
closing. An institutional lender will re-check your credit score
just before closing and these new items could mean you no longer
qualify for the loan.
It can adversely affect your score if you close down
several credit cards and consolidate them. Here's why:
Let's say you have 4 credit cards all with a $5,000
limit. You owe $1,000 on each. You are using 20% of your
available credit. Now assume you transfer The balances of
three of the cards to one of them and close the other three.
You still owe $4,000. And you are within your $5,000 credit
limit, but you are now using 80% of available credit.
What is equity?
The word equity is described by the difference in the
market value of the property and the owner’s mortgage debt for