Of course FICO isn't everything. On the other
hand as they say "it is way ahead of whatever is in second place".
Employers are using it to determine stability. Landlords are using
it to determine ability to pay timely and other factors associated
with being a good tenant. Too, lenders use it to determine if you
get a loan and at what rate. Insurance companies use it to determine
what kind of risk you are.
FICO scores are a
composite of data using scoring models and mathematical tables that
assign points for different pieces of information, which can be
predictors of future, credit performance. Developing these models
involves studying how millions of people have used credit. Credit
scores analyze a borrower's credit history considering numerous
factors such as:
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Late payments
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The amount of time credit has been established
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The amount of credit used versus the amount of credit available
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Length of time at present residence
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Employment history
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Negative credit information such as bankruptcies, charge-offs,
collections, etc.
Amazingly income
doesn't count. Think about it a millionaire who doesn't pay his
bills on time is worse off than a $40,000 yr wage earner who does.
For many people the best time to check your FICO
score is 6-12 months before making a major purchase like a car or a
home. Why so long? If there is a problem it will allow you
sufficient time to fix it. If repair work needs to be done to your
score that can be a lengthy process. To some, they make the argument
that you should monitor your score on a regular basis-it is that
important.
There are very few things you can do before
applying for a home mortgage loan that are more important than
knowing your FICO score. Fair Isaac & Company- FICO-is the score
that greatly determines your interest rate on any loan-car,
furniture, home equity, and of course on credit cards. It can even
determine IF you get the loan. And nowadays it is so much more. Try
renting an apartment, getting car insurance, or even getting a job
without someone checking out your FICO score.
