Do you know what does your FICO score is? If not, it’s time to find out. Your FICO score is calculated by the three major credit bureaus (TransUnion, Equifax, and Experian) and can be a powerful tool in planning when it comes to securing big loans like mortgages. It measures how much you’ve borrowed from lenders and how well you’ve been paying them back.
How does my FICO score affect my life?
The FICO score is a numerical assessment of your credit risk. Financial institutions use this score to help determine your creditworthiness; in turn, it influences the amount of money you can borrow, the interest rate you pay on loans, and the total amount of time that you have to make payments before defaulting. Because credit bureaus use your FICO score to evaluate your loan risk, this is what lenders use when deciding whether or how much money they will give you.
What does a high FICO score mean?
A high FICO score indicates that you have been a responsible borrower, making payments on time and not applying for many different types of loans. Your score reflects the information in your credit report and is based on information such as:
- How much money is currently owed on your accounts
- How recently and frequently you’ve applied for new credit
- Whether or not any of your accounts are past due or in collections
What is a good FICO score?
Most experts agree that your FICO score should be between 680 to 740 to ensure that you qualify for the best rates available. If your score falls below this range, getting your application for mortgage or car loan approved can be difficult.
Why do you need your FICO score?
The FICO score is most often associated with getting or applying for loans. However, mortgage lenders aren’t the only ones who use it — employers and other agencies also often ask you about your score when considering whether to loan money.
How can you improve your FICO scores?
Make sure that you have a positive payment history
This is especially important if you have a lot of revolving credit accounts. The reason for this is that your payment history significantly affects your score. If your payments are late, or you simply don’t pay on time, then your FICO score will consider these negative factors when calculating your score.
Check your report accuracy
This is another commonsense option that has proven to be an effective way of increasing a person’s score. Although it may not seem like this is a practical method, if you do make mistakes or haven’t kept up with your payments in the past, they may be on record somewhere on your report. If you do find the mistakes, you can either remove them or fix them to improve your score.
If your FICO score is low and you can’t secure a traditional loan, we can help you. Insula Capital Group offers a range of private loans that have flexible terms. Our loan products include hard money construction loans, flip loan financing, business bridge loans, and more. Contact us today to learn more about our financing services.