The FICO Score Misconceptions
There are many misconceptions about credit scores out there. There are borrowers who believe that they don't have a credit score. There are others who think that their credit scores don't really matter. These sorts of misconceptions can hurt your chances of gaining employment, obtaining preferred interest rates, and even your chances of qualifying for renting an apartment.
The truth is, of you have a bank account and you pay utility bills, then you have a credit score, and it matters more than you might think. Your credit score can be called many things such as a credit risk rating, a FICO score, a credit rating, a FICO rating, or a credit risk score. All these terms refer to the same thing: the three-digit number that lets lenders get an idea of how likely you are to repay your bills.
Every time you apply for credit, apply for a job, or even apply to some apartment complexes, your credit score is checked. Another misconception is that employers check your credit only if you apply for a job that involves handling money. The fact is that many companies use credit checking as part of their standard background checks.
Make no mistake, your credit report can be checked by anyone with a legitimate business need to do so. Your credit score is calculated based on complex formulas. Things such as your past financial responsibilities, past payment records, credit limits, credit line utilization, open and closed accounts, and public records are all considered. It provides potential lenders with a quick snapshot of your current financial state and past repayment habits.
In other words, your credit score lets lenders know quickly how much of a credit risk you are. Based on this credit score, lenders decide whether to trust you financially. They use this information to approve or decline a loan. Even if approved, your credit score can have a direct effect on the interest rates you pay. Apartment managers can use your credit score to decide whether you can be trusted to pay your rent on time. Employers can use your credit score to decide, perhaps unfairly, how you manage your life. Some employers find that if you're poor with money, you have poor organization skills and no attention to detail -- things that are a must in a corporate environment.
The problem with credit scores is that there is quite a bit of misinformation circulated about, especially through some less than scrupulous companies who claim they can help you with your credit report and credit score -- for a fee, of course.
From advertisements and suspect claims, customers sometimes come away with the idea that in order to boost their credit score, they have to pay money to a company or leave credit repair in the hands of so-called "experts." Nothing could be further from the truth. It is perfectly possible to pay down debts and boost your credit on your own, with no expensive help whatsoever. There are many free resources on the web that will enable you to do just that.
Lee has done it all in the lending business. From loan origination to processing to underwriting, even owning a mortgage company. In http://www.credit-restoration-kit.com, he exploits the secrets of the industry to help fix credit, obtain mortgages, and improve financial standing. Free articles, resources, and a blog.
Latest News
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CreditCards.com: Weekly Credit Card Rate Report MarketWatch - AUSTIN, Texas, Aug 28, 2008 (BUSINESS WIRE) -- Annual percentage rates for new credit card offers dipped lower this week, according to the CreditCards.com ... |
State Employees' Credit Union Extends Long-Term Agreement with Visa MarketWatch - As part of the agreement, SECU, one of the largest credit unions in the United States, will continue to offer its members the full range of Visa consumer ... |
Small Businesses Dissatisfied With Credit Card Processors MarketWatch - CHICAGO, IL, Aug 28, 2008 (MARKET WIRE via COMTEX) -- A new survey shows small businesses are dissatisfied with their credit card processing arrangements. ... |
Sallie Mae says credit facilities have shrunk Reuters - By Dan Wilchins NEW YORK, Aug 28 (Reuters) - Sallie Mae said credit facilities that help fund its loans have shrunk, in a development that could reduce the ... Sallie Mae Lowers Amount for Private Loans, May Face Downgrade |
European Stocks Climb on US Growth; CRH, Credit Agricole Gain Bloomberg - Credit Agricole, France's third-biggest bank, jumped 8.9 percent. The Dow Jones Stoxx 600 Index added 1.4 percent to 287.21, trimming this year's decline to ... European stocks edge higher, helped by Agricole and MBIA European Stocks Climb on US Growth; CRH, Credit Agricole Gain Credit Agricole |
UPDATE 1-Credit Suisse cuts Coca-Cola to neutral Reuters - Credit Suisse analysts also said its economists were expecting a bottoming out and recovery of the dollar for 2009 and beyond, adding that this may have a ... Coca-Cola downgraded to neutral at Credit Suisse Coca-Cola (KO) Lower Following Analyst Downgrade The Last Straw for Coke |
Hanmi Financial appoints chief credit officer Bizjournals.com, NC - Hanmi Financial Corp. has appointed John Park executive vice president and chief credit officer, the company said Wednesday. Park was most recently senior ... |
CREDIT AGRICOLE SA : First half 2008 MarketWatch - Credit Agricole SA's Board of Directors, chaired by Rene Carron, met on 27 August 2008 to review the accounts for the first half of 2008. ... |
Moody's Upgrades Oncor's Credit Rating MarketWatch - DALLAS, Aug 28, 2008 (BUSINESS WIRE) -- Today, Moody's Investors Service announced that it upgraded Oncor Electric Delivery Company LLC's senior secured ... |
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