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Knowing the components of your FICO score is essential to understanding how creditors look at you. There are several important factors that affect your score which everyone should know about.
A few months ago, someone asked me about FICO scores, and we had a great talk. I thought I'd reprint a post from our real estate forums to help you all out. Toney posted the following, which has some great info pertaining to credit and FICO scores.
The components of FICO are:
Payment History - 35%
Amounts Owed - 30%
Length of Credit History - 15%
New Credit - 10%
Types of Credit Used - 10%
What can affect your score?
1 - High outstanding debts. - keep balances low on credit cards and other revolving credit.
2 - Late payments - note that paying off collection accounts will not remove them from your report. These accounts will stay on for seven years unless you get a letter of deletion from the collector.
3 - New accounts - If you've been managing credit for a short time, don't open too many new accounts too rapidly
Understanding how your score is determined and what can affect your score will hopefully help folks to act more responsibly, creditwise.
Learn about real estate investing at:
BiggerPockets.com Real Estate Investing Community - http://www.biggerpockets.com
BiggerPockets.com Real Estate Investing Forums - http://forums.biggerpockets.com
Author: Joshua Dorkin & ToneyJ of BiggerPockets.com
Real Estate Investors & Educators.
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