How to determine a good credit score

[chandu]

Instead of checking your bank credit history or any other documents, the first thing that credit card compaines do is that they will check your FICO score. FICO determines your credit history, a good FICO will give you a lesser rate of intrest and a good credit limit.

[emdash]

Do you happen to know how they determine your Fico score? What are the main areas they look at to determine this score? I know they look at past due and years of credit but what else goes into the score?

[Jeremy]

FICO is a single number derived by a forumula from the Fair Isaac Corporation that takes the factors from your credit report and simplifies it down into a single number. The actual formula is kept secret but they do release what it's made up of.

35% - Payment history
30% - Current credit usage
15% - Length of credit history
10% - Applications for new credit
10% - Types of credit

[pete101]

You mention how many times you apply for credit impacts your Fico score. Does that mean that if I actualy apply for too many different credit cards that this can hurt my credit rating? I thought having more credit was good?

[latoya]

Quote:

Originally Posted by pete101

You mention how many times you apply for credit impacts your Fico score. Does that mean that if I actualy apply for too many different credit cards that this can hurt my credit rating? I thought having more credit was good?

Having a $100,000 credit limit between 2 or 3 creditors looks a lot better than having 10 credit cards with a $10,000 limit on each one.

Applications for new credit look bad for two reasons. 1) It makes lenders think that you are having some kind of financial trouble and looking for credit cards to help you out or 2) It looks as though you are taking on too much debt, both of which look bad to credit granters.

Inquiries only remain on your credit report for 1 year and those that are more recent hurt more than others. Remember that inquiries are only 10% of your score. If you are strong in the other areas, having a lot of inquiries can only knock you down a few points.

[entropic]

These are some great tips latoya.

I agree that having just a couple of higher limit cards is much better than a bunch of low limit ones, even if the overall amount is the same.

Quote:

Originally Posted by latoya

Having a $100,000 credit limit between 2 or 3 creditors looks a lot better than having 10 credit cards with a $10,000 limit on each one.

Applications for new credit look bad for two reasons. 1) It makes lenders think that you are having some kind of financial trouble and looking for credit cards to help you out or 2) It looks as though you are taking on too much debt, both of which look bad to credit granters.

Inquiries only remain on your credit report for 1 year and those that are more recent hurt more than others. Remember that inquiries are only 10% of your score. If you are strong in the other areas, having a lot of inquiries can only knock you down a few points.

[broespeed]

Well I am up the creek... I have like 10 cards already... mostly store cards but still! My credit score must not be that good then... but for some reason they keep gving me the cards when I apply?

[sekhar]

Yes, Good credit history, you will have a good FICO score!! which will inturn result in getting very good cards

[sathyasimha]

shaker you hav mentioned that for maintaining good cradit limit and low intrest we should have good FICO. can u exaplain me what is FICO and what can we do for having goof FICO value?

[latoya]

The term FICO comes from the company that designed the credit score - Fair, Isaac and Co. Your credit score is an indication of the risk you pose to credit granters. It tells how likely you are to pay your bills.

To have a good FICO score you should:
1. pay your bills on time
2. keep your balances low (within 25% of the limit)
3. keep your oldest credit card open
4. don't apply for too many loans or credit cards
5. have a mix of credit cards and loans

The ones in bold are the most critical to having a good credit score.