How is Your Credit Score Determined?
By Tracy L. Hirsch
Credit scores, as we all know, are extremely important. When someone uses the term “credit score,” they are usually referring to your FICO score. However, other Kentucky lenders, such as banks and large institutions, will calculate your credit score using their own methods which are often kept secret.
Your FICO score is your credit history at the moment in time that you apply for a loan. Lenders will look at your credit history to determine if you are trustworthy enough to purchase the amount of credit you are applying for.
Your FICO Scores take both positive and negative information in your credit report into consideration. If you make late payments, it will lower your FICO Scores. However, if you consistently make your payments on time every month, that will help raise your score.
It’s important to know what your credit score is before applying for a loan or line of credit. If it needs improvement, there are ways to increase it before borrowing from a lender.
For the general public, FICO determines your score using five categories that are seen in the chart below. However, there are some groups where the categories may vary. For example, if you have little to no credit history, the calculations will be different.
720 is the average U.S. credit score, which means that half of the population’s credit score is higher than 720, and the other half of the population’s credit score is lower than 720.
Your Kentucky credit score is determined by multiple factors, including (but not limited to) timely payment record, the amount of debts owed, and your credit history.
If your credit score is suffering due to an overwhelming amount of debt, contact me today. You can text or call (502) 435-2593 to set up a free consultation, or email me at tracy@hirschbklaw.com.
