What is a Credit Score?
Your Credit Score is a rating, which determines your
credit-worthiness from the perspective of credit bureaus
and finance companies. Credit Scores have an enormous
impact on how much financing you can get and the interest
rate it will cost you.
How is it calculated?
Scores are calculated using risk models created by
Fair, Issac and Company (“FICO”). These risk models
are used by Equifax, Trans Union and Experian, the top
three credit bureaus.
The models analyze your debts, credit history and payment
history; and make comparisons with millions of other
people in numerous categories to arrive at a “relative”
score.
The most important factors affecting the calculation
of your score are: previous payment behavior, current
debt, the length of time you’ve used credit and pursuit
of new credit.
What's a good score?
While no specific definition of “good” is universally
accepted, the general view is that a score of 660+ is
considered “prime” or “A” credit.
How does the Credit Score affect the
interest rate?
With the Energy Loan from Fannie Mae, an important
“cost driver” is the Energy Loan portfolio performance.
In other words, the number of people/loans which default
on Energy Loans affects the cost of the portfolio; lower
defaults means lower interest rates. Since Credit Scores
have a strong relation to defaults, the Credit Score
is set to support low defaults and, therefore, low interest
rates.
How can I learn more, check my Credit
Score or repair my Credit Score?
We’ve assembled some “links” to other sites that offer
information and assistance.
|
|
