A Credit Score Indicates To Lenders How Likely You Are To Repay Or Default On A Loan.

March 29, 2009 - PRLog -- What is your credit score?  

A credit score or number indicates to lenders how likely you are to repay or default on a loan.  

The program used to generate this number is very complex.  The bureaus use secret calculating techniques to reach these numbers.  There are various formulas used.  Basically put, your information is entered into a computer.  The program calculates the data information stored by the 3 bureaus , it then produces a number, Your FICO score or Credit score.

One of the biggest problems with the information used is that over 79% of all credit reports contain inaccurate information.  This will then effect the actual FICO number.
It is imperative that you keep track of the information found on the credit reports and correct any information that is not correct.  You may be suffering just because of inaccurate information.

To get the best interest rates your goal should be to have a rating of 720 or higher.  By having this rating you  can do things like refinance your mortgage at a lower rate,  car loans can be obtained at a lower interest rate.  You can literally save thousands of dollars monthly, lower down payments for utility deposits, and even  have a better opportunity for obtaining certain jobs, (Government Jobs for example).

The FICO range is 300-850
Excellent - over 750
Very good - 720-750
Good / ok 660-720
Could be risky 620-660
RISKY below 620

There are several calculations used for obtaining the FICO number.


35% is calculated based on payment history.
   Lenders want to know what type of risk you may be.  They want to make sure that you can pay your bills on time, based on your past history.
30% is calculated by the amount that you owe.  Debt to Credit Ratio (DTCR) is determined by the total available credit divided by the total debt.  It is important to try to keep your credit limit to about 30% of the maximum credit allowed.
   Total credit avail =$2000.00 / total debt $500.00  = 25 %.
15% is calculated by the by the length of time that you have had the credit.  The longer the credit history the better.  This factor determines how you have spent over a period of time and how well you paid the debt back.
10% is calculated by the number of new account or nquiries that you have.  Inquiries can be looked at as if you wanted all the new debt.  That you may be setting yourself up to failure to pay your debt.  Also, new accounts do not show enough history, there is no proven payment history to make a determination if you are worthy of good payment.
10% is calculated by the “mix” of credit that you have.  The “mix shows that you can handle and manage multiple accounts responsibly.

Other things that are added to the equation of a FICO score:

They looks for things like stability in your living situation,  moving frequently may lower your score.
Owning a home may increase you score.  Paying your mortgage on time is the most important thing.
Do not max out your credit cards.  Keep them at least below 50% of the maximum balance allowed, preferably 30%.
Limit the amount of cards that you have open.  2-3 is a safe point.  More than that may lower you score.
Pay your monthly payments on time.


What can happen if you have negative items on your credit report.

Companies can charge you higher interest rates.  The higher you are as a risk the more money they can charge,and the more they make.  Having a low credit score can also prevent you from getting hired for a job.

Remember "the credit bureau is not your friend".  They work hand in hand with mortgage companies, car loan companies, insurance companies etc.  The more interest you pay the more money these companies make.  Bottom line.

If you have experienced poor credit there are ways to remedy this.  You could hire a credit restoration company.  However, just remember to do your homework.  There are a lot of companies out there that make claims about doing credit repair and only do what you can do yourself for free. See www.FTC.com.  Like sending dispute letters etc.  You should find a company that has ties with a law firm or attorneys in their organization.  They should have some type of money back guarantee to protect thier clients investment.  They should be available to answer your questions.  They should be legal, moral, and ethical.  

If you find yourself in credit hell give us a call 888-476-1220 or visit our website www.UsaCreditCure.com   USA Credit Cure

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I am N.L. Wilson a professional Real Estate Investor with over 20 years experience, as well as a highly skilled Credit Restoration Advocate. I would like to share with you; USA Credit Cure. We are one of the only 100% legal credit restoration companies. We are a credit advocate company that specializes in helping people that are credit challanged. We assist our clients in re-entering back into the credit economy by educating them, giving them an understanding of how the credit system works. We feel that by providing our clients with the knowledge and help that they need that the will be able to contibute to a successful life for the betterment of their family and for themselves. We pride ourselves in Rebuilding America one client at a time.