January 30, 2009
FICO Scores
Are FICO scores a bit of an enigma to you? Well, if they are, you’re not alone! So here’s a little info on how FICO scores are generated…
A FICO score is a statistic. It shows on a scale of about 350-850 (depending on which of the three major bureaus you are talking about) how likely you are to pay back your debt according to the original terms. Simple enough, right? Well, the way they determine what your score (or likelihood) is to do that is evolving and changing everyday because every day they gather new information on paying back debt.
They literally look at your exact situation, compare it to others that were in that exact situation and determine how many of those people paid back their debts according to their original terms.
You have heard that getting your credit pulled hurts your score, right? Well, yes and no. It depends on what the rest of your credit shows. Such as, someone who is applying for more debt and already has maxed out credit cards is more likely to default than someone with very small balances on their cards. Usually those with small balances aren’t getting more debt to make ends meet; they are probably just looking for the best rate. So their credit pulls hardly hurt them at all, whereas the first guy’s score has probably dropped upwards of 30-60 points.
Posted By: 
Brad Sears
Tagged With:
bad credit,
debt ratios,
fico scores
and good credit
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