FICO Credit Score and Missed Payments?
FICO Credit Scores
We've all heard about FICO credit scores, but the amount it can affect your life and your ability to borrow money, and the rates you can borrow at are directly affected by your FICO credit score isn't clearly understood by many people.
We can help... read on.
What does Fico stand for?
FICO was created by the Fair Isaac Corp as a way to measure people's risk profile i.e. if someone were to lend you money, are you likely to pay it back?
Why does a good credit score matter?
A good credit score is important because it gives lenders an indication of your risk profile and whether they should extend credit to you and on what terms. Bad credit history means higher risk for the lender so they are likely to charge higher interest rates.
What is a good credit score?
FICO scores start at 350 and then go all the way up to 850. In reality, having an 850 score doesn't make much difference to your borrowing potential than an 800 score, unless you are claiming bragging rights.
800+ very very good!
740 to 799 is very good.
670 to 739 is good and represents the average for most Americans
580 to 669 is categorized as below average.
579 or less is a poor credit score.
How does FICO calculate your credit score?
The score comprises five main components derived from your credit history, and each component contributes an amount to the total based on its importance.
Payment history: 35 percent.
Amount of debt: 30 percent.
Length of credit history: 15 percent.
New credit: 10 percent.
Credit mix: 10 percent.
What happens to your credit score if you miss payments?
Missing payments inevitably means your credit score is going to be downgraded accordingly. You can correct it but if you continually miss payments and default on your loans, then you must address these issues before they get worse and your creditors take legal action.
What to do if you start to miss credit card or loan payments
Things sometimes get better and money that you are expecting to come in, comes in, but don't delay. We can help you before this happens and show you how to solve the issues. Contact us now.