Also known as Beacon score, FICO score or Empira score, the credit score is a numerical value representing an individualâ€™s financial creditworthiness. In other words, this number reflects the level of confidence that financial institution have in regards to grant any kind of loans to an individual.
The Beacon score shows on the Credit Bureau. This is a report maintained and updated on a regular basis. You can find a lot of information such as your date of birth, previous and actual employment, your credit score, the balance owed on any credit account, missed payments and all your inquiries to financial institution (even for your cell phone !). There are three major companies that provide the Credit Bureau: Equifax (equifax.com), Experian (experian.com) and Transunion (transunion.com).
It can go from 300 to 900 points. No Beacon score means that you donâ€™t have a credit history or that you went bankrupt, all your accounts have been written off by the credit grantor and you didnâ€™t apply successfully for any new credit products. The more your FICO score is high the better it is. A score of 700 and up is considered to be good. However, please note that 75% of the population have more than 700.
A high credit score means less risk for the bank. Most of the financial institutions calculate their rates based on this score. So by increasing your credit score, you will be able to get better rate. According to FICO.COM, a $216,000 mortgage over 30 years could cost 5.89% to someone who has a score from 760 to 850 but up to 7.48% for score between 620 and 639. As you can see, the FICO score itself could affect drastically your mortgage payment
The Credit score is fluctuating on a daily basis as you manage your personal credit. Several factors can influence it and many myths exist around this three digit number. I will post several tips and explanation on many topics related to the credit score in the following weeks. Be sure to come back soon!
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