Credit score is a number calculated from the statistical analysis of a person’s credit history. A credit score is used to determine whether a person qualifies for a loan. The credit score is also use to determine the interest rate and credit limit for the person. There are a number of scoring systems but the most widely used is FICO, an acronym for Fair Isaac Corporation, a publicly-traded company that created a model for statistical analysis used by reporting agencies. In the U.S., there are three such agencies: Equifax, Experian, and TransUnion. Each uses their own method for computing the scores. Different formulas are generally used for different loans. For the same person, a score for a mortgage could differ by 50 points or more from the score for a car loan.
Elements that go into determining a score include punctuality of payments, any bad debts, amounts of debt, length of credit history, types of credit, and any recent examinations of credit history. Each carries a different weight. The statistical models used for generating scores are subject to federal regulation and must be statistically sound. Resolving bad debt and making payments on time have probably the greatest influence toward improving a person’s credit score.
A FICO score can range between 300 and 850, with the higher scores being better. Reportedly, the median score – the middle score for all people with a credit agency file – is 723, since scores tend to be skewed more to the higher numbers. Actually, each individual has three different scores since each of the reporting agencies maintain their own databases. Each database could contain different pieces of information.
Why all the talk about credit scores in today’s real estate market? The deals available to home buyer in today’s Florida real estate market including foreclosures in my opinion makes sense. Prices are lower now that they have been in 7 years. One more thing do miss out on the great deals one can get for a custom concrete swimming pools option with your home purchase.
By ~Rachel Ord~
Tags: credit score, fico score, Credit rating, model for statistical analysis, median score, credit history, s real estateFiled under: Every Day Life
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Tim Ramsey