A FICO credit score is essential for every person who wants to apply for a loan – car, home, credit card. However, they must know that they must possess the right credit score that can quality in their attempt to obtain a loan. On top of that, they should also be responsible in knowing the formula of how really this service works.
Basically, FICO scores are tabulated with the use of different data that were based upon people’s credit reports. FICO uses this formula that is based in five major factors; each of it can affect people’s attempt in getting approved for a loan. Each of the part of the percentage has live score their own importance. The five major factors to be considered in FICO credit score formula are payment history, amounts owed, length of credit history, new credit and the types of credit used.
Each of these five can really affect the person in their attempt to maintain or enhance the level of their creditworthiness for them to have more points that are essential in getting a loan. People should know that making payments in time can help them to add points to their scores, therefore, maximizing their chances in getting a loan.
However, people should also keep in their mind that these factors are correlated with each other, which means failure to achieve even one of these factors can narrow their chances in obtaining their desired FICO score – ideally 700 and above.
Moreover, people should be very precise in stating their credit reports because the FICO score will ultimately depend upon it. Not all people have the same credit reports so it is strongly suggested that they must do whatever it takes for them to obtain appropriate credit scores based on their credit reports.
Nowadays, FICO offers the most recognized credit scoring formula to help people in their attempt to find better ways in knowing their scores, as it can propose quality services for people. Also, people should know that lenders will look on all the essential things that are needed in order for them to know these people can really avail of their loans and pay them back. From people’s income up to their current job, lenders will look into these things, so people must do their best to affirm that they entitled to get one.
For people who lose track of their credit reports or if they did not manage to pay in time, which resulted for them to get a bad credit score, they can always re-establish their payments which can help them regain their status in order to attain an enhanced FICO credit score.
The FICO credit score formula is a unique way in order to track people’s creditworthiness. They should also see to it that this formula from FICO works differently than its competitors, because it helps people to obtain credit more effectively, which results for this people to have a better credit score.