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Pensacola Real Estate News: What is a FICO score?

A FICO score is a credit score developed by Fair Isaac & Company, Inc. Credit scoring is a method of determining the likelihood that credit users will pay their bills and not default on the loan. Credit scores range from 350 to 900, with a higher number being better. If you are looking to borrow money to buy real estate in Pensacola Florida, your credit scores will have an affect on how much you can borrow and what the interest rate will be. How_Credit_Scores_Computed_text

Fair Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become accepted by lenders as a reliable means of credit evaluation.  A credit score attempts to condense a borrower’s credit history into a a single number.  Exactly how these scores are computed is a secret that Fair, Isaac & Co. and the credit bureaus do not reveal. Secrecy in determinining rankings didn’t start with Google search engine algorithms. However, we do know generally what type of activities raise and lower credit scores.

Credit scores are calculated by using scoring models and mathematical tables that assign points for different pieces of information which best predict future credit performance.  Developing these models involves years of studying how hundreds of thousands of people have used credit. 

There are three FICO scores computed by data provided by each of the three bureaus – Experian, TransUnion and Equifax.  Some lenders use one of these scores, most lenders may use the middle score and some will use whats called a blended score.  

 

Related Articles on Pensacola Real Estate News: 

 Your Credit Score – The Key To Building Your Future Wealth

The New Credit Scoring System – How Will It Affect Your Credit Scores? 

How Not To Lose Your Home Loan After You Are Already Approved

Click on Pensacola Real Estate News for a list of articles indexed by category.

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    […] What Is a FICO Score? […]

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