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Definition of Credit Score from Mortgage Glossary

Credit Score A single numerical score, based on an individual's credit history, that measures that individual's credit worthiness. Credit scores are as good as the algorithm used to derive them. The most widely used credit score is called FICO for Fair Issac Co. which developed it. The most notable and widely known credit score is called the FICO score. FICO is an acronym for Fair Isaac Company. Fair Isaac is the company who came up with the formula for the score. The higher the FICO score, the better the chance are that a borrower will make their payments on time. FICO scores range from 350 to 850. The minimum score to qualify for the lowest rate would be 740. This does vary from lender to lender, and is dependant upon all of the information provided by the borrower to the lender. Credit scores have done wonders for speeding up the loan decisioning process. The only down side to the credit reports and fico scores is the possibility of an error. For instance, if someone with a similar name has one of their accounts show up on your credit report, this can and will affect your credit score. Errors on credit reports are not at all uncommon. Will Time Improve My Credit Report? The Federal Fair Credit Reporting Act sets limits on how long derogatory information can appear on your credit report. Once a record has been on an individuals credit report for the subscribed period of time, it is, by law, supposed to drop off. Before negative information drops off of your credit report, it will continue to have a negative impact on your score. This is why it is important for borrowers to establish new credit where the outcome will have a positive impact on their report. This will help your credit score begin to rise. By letting your derogatory accounts sit around on your credit report without establishing new and active credit accounts you are only hurting your score. Do Credit Inquiries Hurt Your Credit Score? Generally speaking, credit inquiries will hurt your credit score because it has been found that multiple inquiries are a red flag when it comes to a high risk of default. However, multiple inquiries can happen as a result of someone shopping around for the best deal. Credit scorers do take this into consideration. Credit scorers do not pay attention to auto and mortgage inquiries that happen within thirty days of the scoring date. Also, to avoid hurting the borrower’s score from any earlier shopping that the consumer may have done, the credit scorers will treat all auto and mortgage inquiries that occur within a fourteen-day period as one single inquiry. The only inquiries that affect your credit score are those by new credit grantors to whom you have given authorization to do so. Credit Report Equal Credit Act Debt Consolidation Buying House with bad credit Refinancing house with bad credit Credit Problems, What You Can Do				You'll be re-directed to Loan Savings Solution Web Site
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