It’s Not Just About The Numbers
Your credit score is not just about the numbers. Here are some important facts that you need to know about your credit in general –
• Without credit you have no credit score – you need at least one account with one lender that has been active for at least six months and one account that has been updated in the past six months to qualify for a credit history. If you have no credit history or if it is spotty then there may not be enough data in your FICO file to create a history in the database. This does not mean that you are not scored at all. Instead you will be graded with something called a FICO Expansion score that was invented specifically by Fair Isaac to monitor the financial activity of people who might be potential users of credit. This new score uses non-traditional information sources like payday lenders and companies that keep track of bounced checks to assess your situation.
• The score is considered along with other factors – such as your employment history, financial stability, the value of the property you own or may be buying, your income and your monthly payments towards any debt you may be carrying. If these things are not secure in your life a high credit score may not matter. This is particularly true if you are dealing with a mortgage type lender who will look at other factors that influence your credit aside from your payment history.
• The process of credit assessment is purposefully unpredictable and confusing. The credit scoring companies do not want their methods to be transparent. If you feel confused during the process of applying for credit it could be that the lenders assessing you are doing their job just as their bosses want them to. The more distracted and panicked you are during the entire credit application process the more likely you are to grab a loan with a high interest rate just to get it over with or because you feel you don’t have any other options.