Tuesday, November 9, 2010

Your Credit Score and How It Affects the Loan Process


A credit score is a numerical figure that represents a person's creditworthiness.  This numerical figure is computed via a statistical analysis and takes into account a person's past and present debts, payment history, public records (bankruptcy), and collection accounts.

In the United States, FICO Credit score takes into account the Experian, TransUnion, and Equifax.  Your FICO score is the median number between the scores of those 3 credit scores, and the range is between 300-850, with the higher number being a better score.  The median FICO score of Americans is 723, and anything under 670 is considered a below average credit score.




Since your credit score determines your creditworthiness, it affects your ability to obtain a loan.  Other factors such as income, assets, and debt obligations also factor into your ability to qualify.  Ideally, you put yourself in the best situation (lowest rates, best terms) for a loan by having a high credit score, significant assets, and little to no debt obligations as you would pose the least amount of risk of defaulting.  The lower the risk of defaulting, the cheaper the loan will be for you.

48 comments:

  1. Very interesting stuff here, thank you

    ReplyDelete
  2. Do Kaplan offer test prep for FICO?

    ReplyDelete
  3. wow, you have a really clean layout, great job

    ReplyDelete
  4. Yeah, I need to score better on mine bigtime.

    ReplyDelete
  5. Great post. I have a good sore thankfully. So many ppl don't.

    ReplyDelete
  6. whats the equation for determining the percentage of the loan?

    ReplyDelete
  7. Thanks for the info. I need help with my credit.

    ReplyDelete
  8. mmm ... that's some neat infos.

    ReplyDelete
  9. I don't think this exists in Europe.

    ReplyDelete
  10. Right on! I'm saving this post on my computer. Very useful.

    ReplyDelete
  11. I think I'm around 720-ish but it's because my credit history is pretty young, apparently (around five years).

    ReplyDelete
  12. Great information. Definitely help in the future.

    ReplyDelete
  13. I never understood how this things work :D

    ReplyDelete
  14. 710 here, good to know thats above avg, i rarely use credit cards unless its an emergency

    ReplyDelete
  15. Always good information, always. Great blog man. Keep it up.

    ReplyDelete
  16. This is interesting, I don't know my rating

    ReplyDelete
  17. Never defaulted and never hope to so my current credit score should be in good shape.

    ReplyDelete
  18. My goal is to get 800!!! yeahhh super loans!!

    ReplyDelete
  19. I wonder what my credit score is since ive never paid a loan or anything.

    ReplyDelete
  20. I have no idea what my credit score is, is that bad?

    ReplyDelete
  21. Interesting, thanks for the info!

    ReplyDelete
  22. I'm 20 and I gotta focus on this stuff.

    ReplyDelete
  23. Again a great post. Very helpfull !

    ReplyDelete
  24. Good post! Looking forward to reading you next one

    ReplyDelete
  25. cool informative/financial story bro.

    ReplyDelete