Understanding Your Credit Score: Edmonton Mortgage Brokers

Unless you are looking to buy a car or house, you probably don’t even care what a FICO score it, never mind what yours is. But if you are, it is most likely something you think about all of the time. Edmonton mortgage brokers have more details.

Just what does this stand for? It means Fair Isaac and Company. This company uses a proprietary method to calculate a number, or “score” for any borrower to determine if he will be a good risk for a lender.

Often the FICO score is referred to as the credit rating, the credit score or maybe just one’s credit. This rating or score is a figure that shows to a lender that a borrower or will not be a good credit risk.

To do this, they pay for a report that is compiled by a company that specializes in obtaining this information. The main credit agencies that banks and other lenders use are Equifiax, TransUnion and Experian.

They may each have a different system of evaluating the credit information and therefore most financial institutions like to use all of the companies to get the best picture of a potential borrower’s credit worthiness.

This is all calculated on information based on the consumer’s credit dealings through the years. If you get a charge account, pay your electric bill or even rent an apartment, all of the information is stored to see how you have paid these bills. The credit rating agencies then bring together all of this information and weight each of them to arrive at a rating. Check out craigslist.

A higher number will result in a higher credit score, which will mean a better chance of getting a loan. FICO scores can range from 300 to 850.

All of a consumer’s transactions with debtors is carried onto this report, and will indicate the average time to pay bills, size of credit lines, etc. The top credit agencies maintain all of this data in their databases.

Each time you have a negative credit experience, points will be deducted from this score. A late payment or a default or excess credit balances would immediately lower it by a certain amount. The more reductions because of these negative transactions with the companies, the lower your score will be. If you have too many of these problems, the credit rating may go down as low as 350, a number where a lender is not likely to lend you anything.

The idea behind this is that you will continue to pay late and be overburdened with debt, and the new lender will suffer.

If you have only a few problems, your score will not be too affected, and you may still get a loan. Too many, however, and this lender is going to see you as a customer who is consistently irresponsible in his credit obligations and is not going to be willing to take such a risk. Please see mortgage broker in Edmonton to learn more.