Sunday, December 5, 2010

Why Do Lenders Use FICO Credit Scores?

Why wouldn't they; it's the best shot at getting to know a person's potential to pay back on time. Lenders do so to get an impartial footage on a client's FICO credit report as it lets them form their payback policies accordingly.

More or less, a FICO or any other credit score is an official stamp, by which lenders judge you on regular basis. No one wants a high degree of risk or liability at hands, that's why a good credit score enhances the ability of getting a job, subscription based plans, decent mortgage deals, tenancy potentials and medical insurance perks.

You, along your family, are affected by credit reports. No questions asked. If a person has been honoring those debts through on time and FULL payments, there's a minimum possibility of negative entry occurrence in the FICO report. However, failing to comply with any sort of payment modules is an open invitation to a hornet's nest.

Why is it important to safeguard my credit information?
Take it this way, if you have been hooked to a legit Report program, you'll be in better shape to maintain a healthy report. For instance, a 760 - 799 score means that you have 600 to 1 probabilities of falling behind on your due payments. This factor can also be translated in mortgage terms.

Let's say, there is a mortgage deal with $100,000 lump sum value. In this case, a slight 1% interest rate on paybacks would mean that a person is liable to cough up an additional $23,400 over the entire time period of the loan. Mortgage dealer normally "convince" clients on this much amount, through $65 additional monthly payments.

Your best bet is to get 3 free credit scores report on firsthand basis. Why? Because Lenders, especially mortgage officers like to tap into credit reports from 3 major financial institutes. There are online websites that guarantee a safe way of getting report copies without asking for credit card numbers or any other sensitive information. The process is cost effective and normally doesn't take that much of a time as compared to official sources.

What does a lender judge my credit score against?
Your "would-be" lender, car and medical insurer, employer, landlord and any other organization will judge your credit report against;

* Delayed payments
* Bankruptcy records (if any)
* Duration of negative entries and the total number of inquiries
* Total amount of owed payments and interest rate on them
* Other services that you're currently hooked to
* Number of open credit accounts

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