Your credit score can be one of the most important tools to have when you need a loan. Most, if not all, lenders use your Fair Isaac Corporation (FICO) score to gauge your creditworthiness. However as social media and online use are on the rise, many lenders are also factoring in your online presence. Lenders look for online profiles that are complete, and the number, and quality, of connections. They also check for offensive posts, profanity, or extreme political statements.
Your FICO score is a combination of 5 key components, listed in order of importance below:
Payment History = 35%. Credit bureaus don’t record a late payment a payment until it is 30 days past due. It is still best to pay on-time because the creditor may penalize you with hefty fees or an interest rate increase. …show more content…
This amount is the total credit used compared to the limits. You should only use 30% of your available credit and pay it off in-full each month.
Credit History = 15%. The length of time that you have a line of credit, credit card, or mortgage, is important because it shows a strong payment history.
Credit Lines = 10%. Ideally you should have three revolving debt (credit card or a line of credit) and two installment loans (car loan, student loan, or mortgage).
New Credit = 10%. It is a red flag to lenders if you apply for several lines of credit in a short period of time.
Your FICO score ranges from 300, begin the lowest, and 850, which is the highest. The ranges indicate the level of risk you are to a lender. On the consumer side, your score indicates the interest rate and loan terms you are eligible for. See the FICO credit score range below:
800+ = Exceptional. Delinquency rate is approximately 1%.
740 to 799 = Very Good. Delinquency rate is approximately 2%.
670 to 739 = Good. Delinquency rate is approximately
Your FICO score is a combination of 5 key components, listed in order of importance below:
Payment History = 35%. Credit bureaus don’t record a late payment a payment until it is 30 days past due. It is still best to pay on-time because the creditor may penalize you with hefty fees or an interest rate increase. …show more content…
This amount is the total credit used compared to the limits. You should only use 30% of your available credit and pay it off in-full each month.
Credit History = 15%. The length of time that you have a line of credit, credit card, or mortgage, is important because it shows a strong payment history.
Credit Lines = 10%. Ideally you should have three revolving debt (credit card or a line of credit) and two installment loans (car loan, student loan, or mortgage).
New Credit = 10%. It is a red flag to lenders if you apply for several lines of credit in a short period of time.
Your FICO score ranges from 300, begin the lowest, and 850, which is the highest. The ranges indicate the level of risk you are to a lender. On the consumer side, your score indicates the interest rate and loan terms you are eligible for. See the FICO credit score range below:
800+ = Exceptional. Delinquency rate is approximately 1%.
740 to 799 = Very Good. Delinquency rate is approximately 2%.
670 to 739 = Good. Delinquency rate is approximately