STRAIGHT SCOOP — What’s A Credit Score?

FICO score is “an estimate of your credit risk based on your credit report at a particular point in time.”  FICO scores range from 300 to 850.  It is arrived at by inputting information about your credit history and behavior into a mathematical model.  Scores above 740 typically qualify for the best rates; a score below 620 will often disqualify you from many loan programs.

How is your score arrived at?  According to FICO, your credit payment history is responsible for 35% of your score; amounts you owe, 30%; length of your credit history, 15%; applications for new credit, 10% and types of credit used, 10%.

Here are some tips for boosting and maintaining your credit score, courtesy of FICO:  Closing unused credit accounts won’t increase your score, in fact it may decrease it by having fewer open accounts.  But don’t open new accounts just to increase your available credit; that could actually lower your score.  If you are starting to establish credit, don’t open a lot of accounts all at once.  Credit inquiries can lower your score.  However, FICO scores distinguish between searching for a single loan among several lenders and applying tor multiple credit lines.  Try to fit your home loan comparison shopping into a two-week period.

Want more insight into FICO scoring?  There is a wealth of information at myFICO.com.

Under Federal law, lenders have to inform you of how a low score has affected your mortgage rate or terms.  FICO has responded to this by creating a web site to explain the disclosures: scoreinfo.org.  The site replicates some of the content found elsewhere.

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