Exactly What Is Your FICO Score And Precisely How Can It Impact On Your Ability To Raise A Loan?

Many of us are aware that we have a credit record which is maintained by several major credit bureau and a particularly important part of your credit record is your FICO score. So what is your FICO score and just does it influence your borrowing choices?

FICO is formed from the initial letters of the Fair Isaac Corporation who devised this system of credit scoring and it is a number which is usually between 350 and 850 which ranks credit worthiness according to a proprietary algorithm devised by the company, with 350 being the worst score and 850 being the best.

Despite the fact that the algorithms are a closely held trade secret, over the years many people have be able to word out several of the more important elements. For example, late payments will lower your score and the greater the number of late payments you have and the later these payments are the more heavily your credit score is affected. Another element is the total amount of debt which is carried each month. Another not quite so important factor is the number of credit cards you have and the number of credit checks undertaken out on your account.

Any FICO score of less than about 620 is considered as marginal and a FICO score of below 580 is poor. A FICO score of 720 or more is considered to be very good to excellent. A FICO score which comes in between 620 and 720 represents a kind of gray area in which factors other than your merely your FICO score will play an important role in lending decisions.

Mortgage companies, banks, credit card companies and other lenders will look at your FICO score as a very important element in deciding whether to make a loan. These lenders will also take your FICO score into account when setting the interest rate to charge you. All other things being equal the higher your score the lower the interest rate you can obtain.

In many cases of course all other things are not equal and general interest rates, the present demand for loans, the overall economy and other factors have a heavy influence on whether lenders will grant loans and at what rate.

Another extremely important factor in the equation noe is the use of computers which has changed the financial industry significantly during the past 20 years and also provided consumers with much more easy and fast access to products an services through the Internet.

In spite of all these changes your FICO score remains a primary tool for lenders and, although it might not be the determining factor in the final decision, it unquestionably influences the 'first cut' when presented with a stack of loan applications to approve or disapprove.

Fortunately for those people who are in some financial difficulty there are choices and even if your credit score is not very high you nonetheless have several options. The first thing you should do however is to set draw up a plan to raise your credit score.

As you work to get rid of those outstanding debts by paying them off or by negotiating with your lender your credit score will gradually improve. And remember that the age of those 30 and 60 day past due and late payments is a consideration in computing your credit score.

While you are improving your score you can also look around for other lenders willing to take a higher risk by lending you money. The difficulty of course is that these loans almost always carry a higher rate of interest. If you can your best course of action is to try to go without borrowing for a time while you work to improve your credit score.

TheDebtAssistanceCenter.com provides information on a range of topics including personal bankruptcy and exists to provide help with debt problems for borrowers.