The FICO Score Misconceptions
There are many misconceptions about credit scores out there. There are borrowers who believe that they don't have a credit score. There are others who think that their credit scores don't really matter. These sorts of misconceptions can hurt your chances of gaining employment, obtaining preferred interest rates, and even your chances of qualifying for renting an apartment.
The truth is, of you have a bank account and you pay utility bills, then you have a credit score, and it matters more than you might think. Your credit score can be called many things such as a credit risk rating, a FICO score, a credit rating, a FICO rating, or a credit risk score. All these terms refer to the same thing: the three-digit number that lets lenders get an idea of how likely you are to repay your bills.
Every time you apply for credit, apply for a job, or even apply to some apartment complexes, your credit score is checked. Another misconception is that employers check your credit only if you apply for a job that involves handling money. The fact is that many companies use credit checking as part of their standard background checks.
Make no mistake, your credit report can be checked by anyone with a legitimate business need to do so. Your credit score is calculated based on complex formulas. Things such as your past financial responsibilities, past payment records, credit limits, credit line utilization, open and closed accounts, and public records are all considered. It provides potential lenders with a quick snapshot of your current financial state and past repayment habits.
In other words, your credit score lets lenders know quickly how much of a credit risk you are. Based on this credit score, lenders decide whether to trust you financially. They use this information to approve or decline a loan. Even if approved, your credit score can have a direct effect on the interest rates you pay. Apartment managers can use your credit score to decide whether you can be trusted to pay your rent on time. Employers can use your credit score to decide, perhaps unfairly, how you manage your life. Some employers find that if you're poor with money, you have poor organization skills and no attention to detail -- things that are a must in a corporate environment.
The problem with credit scores is that there is quite a bit of misinformation circulated about, especially through some less than scrupulous companies who claim they can help you with your credit report and credit score -- for a fee, of course.
From advertisements and suspect claims, customers sometimes come away with the idea that in order to boost their credit score, they have to pay money to a company or leave credit repair in the hands of so-called "experts." Nothing could be further from the truth. It is perfectly possible to pay down debts and boost your credit on your own, with no expensive help whatsoever. There are many free resources on the web that will enable you to do just that.
Lee has done it all in the lending business. From loan origination to processing to underwriting, even owning a mortgage company. In http://www.credit-restoration-kit.com, he exploits the secrets of the industry to help fix credit, obtain mortgages, and improve financial standing. Free articles, resources, and a blog.
MORE RESOURCES:
 MSN UK News | Credit firms on Facebook 'breaking the rules' Telegraph.co.uk, United Kingdom - Credit firms who target young people by advertising on social networking websites such as Facebook are breaking advertising rules, a charity has said. ... Facebook users warned about loan adverts Credit firms breaking rules with Facebook ads Credit ads breaking Facebook rules |
 Dallas Morning News | Regulators' moves to stop credit card tricks deserves vocal support Dallas Morning News, TX - Consumers should be applauding and pushing rules proposed by the Federal Reserve and other regulators to rein in some much-criticized practices of credit ... Good Question: You can raise that low credit score Barely surviving on credit cards Credit crunched? |
Credit Suisse, GE Raise $5.64 Billion for Infrastructure Fund Bloomberg - By Jason Kelly May 12 (Bloomberg) -- Global Infrastructure Partners, the private-equity venture created by Credit Suisse Group and General Electric Co., ... Global Infrastructure Partners Announces Close of US$5.64 Billion ... |
Telecom increases standby credit facility Stuff.co.nz, New Zealand - The new facility, with Telecom's existing bankers, replaces the previous standby credit facility which had a limit of US$500 million (NZ$654 million), ... TEXT-NZ's Telecom increased standby credit to NZ$800 mln Telecom Raises Standby Credit Facility |
MBIA posts huge loss on credit derivatives Reuters - The 2008 figure included unrealized losses on insured derivatives, such as credit default swaps, of $3.58 billion. Factoring in the unrealized losses, ... MBIA loses $2.4 billion MBIA (MBI) Reports Q1 Loss of $3.03 |
Credit-Default Swaps: Weapons of Mass Speculation Barron's - Buying credit-default swap protection is the ultimate bearish bet. But don't be fooled by the low profile of the business. In the decade since credit- ... |
 MyFinances.co.uk | 2nd UPDATE: HSBC 1Q Profit Ahead Of 1Q07 Despite US Impairments CNNMoney.com - In February of 2007, HSBC became the first bank to acknowledge losses on subprime mortgages, or loans to borrowers with weak credit histories, ... HSBC takes £3bn credit crunch hit HSBC takes further hit from credit crunch HSBC bank hails profits increase |
 CPI Financial | United Rentals' $1 bln senior secured credit facility rated 'Baa3 ... Forbes, NY - United Rentals (nyse: URI - news - people ), Inc.'s existing rating of 'Ba1' for its senior secured credit facility was not affected by these rating actions ... Target ratings, outlook unaffected by credit card receivables sale ... TFN NEWS BRIEFING: Banking and insurance highlights to 09:15 BST Moody's Investors Service Names Michel Madelain As COO |
IndyMac swings to 1Q loss, sees 2008 loss The Associated Press - (AP) — IndyMac Bancorp says it swung to a first-quarter loss as deteriorating credit markets forced write-downs on the value of mortgage-backed securities. ... IndyMac Bancorp Reports First Quarter Loss of $184.2 Million ... UPDATE 1-IndyMac Bancorp reports quarterly loss IndyMac Bancorp swings to 1Q loss; doesn't |
 Telegraph.co.uk | Credit squeeze makes Dragon prey The Age, Australia - The global credit squeeze and the higher cost of funding it has induced is the key that Westpac chairman and former Treasury Secretary Ted Evans hopes will ... Westpac of Australia Offers to Buy St. George Bank (Update7) Bank of Queensland flags more mergers Westpac Bank in takeover talks with St George |
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