How is Your FICO Score Determined?

Interesting...A little education for all of you out there on how your FICO score is determined.

Read an excerpt from Get Rich Slowly, a blog that I follow:


Quick overview of credit scores and home mortgages
Let’s review the anatomy of a credit score. There are a few categories that determine your final number. All you Gwynns out there, lend a quick ear…



A FICO score serves as a quick reference guide for lenders to determine the risk level for them to give money. It’s a number between 300-850, the higher the better.
Lenders take your credit score and a few other pieces of information into consideration, such as age and salary, and make a decision about how your loan will play out. In short, a high score will be less risk, therefore a lower APR and less overall cost to the borrower.

Here’s a chart comparing APRs and total cost for a 30-year fixed mortgage on a $500,000 house:

Credit Score	APR	Including interest, your house will cost…
760-850 (best)	4.014%	$860,760
700-759	4.236%	$884,160
680-699	4.413%	$902,880
660-679	4.627%	$925,560
640-659	5.057%	$974,880
620-639 (worst)	5.603%	$1,003,560

Source: myfico.com

--Taken from www.getrichslowly.org 
(Tim Sullivan)
 

Bottom line: the only way to build a good FICO is to borrow money (regularly) and pay it back. At the top of my game, I had a 769 FICO score and around $50,000 in open lines of credit, which (by the way) I was sooo proud of.

However my score was not an accurate measure of how financial sound I was. It was just my "I love debt" score...nowadays I count my financial security in actual cash and real assets.  That is, I let my FICO score take care of itself...the only reason I pull my credit report today is to make sure its accurate.

You think rich people give a flip about their credit score? We want to be RICH don't we?

One day I hope to be more like Gwynn in this story, she rocks! 

Check It Out! 
http://www.getrichslowly.org/blog/2012/03/29/bulking-up-your-credit-score-are-credit-cards-your-best-option/



MsMoneyGuru