What is this thing called FICO? It stands for Fair Isaac and Company. This is the name of a company that uses a ?secret? formula to arrive at a number, between 300 and 850 that indicates a borrower's credit worthiness.

Many people refer to the FICO score as your credit score, your credit rating, or just plain your credit. They all mean the same thing; a lender is trying to find out whether a potential borrower is a good risk.

Therefore, lenders pay for the service that supplies this information, based on the financial data of a borrower. The main credit agencies the banks and other lenders utilize are Equifiax, TransUnion and Experian

They each weigh this information slightly differently, so the average of their weightings are used by Fair Isaac; higher weights assigned to certain parts of the score to arrive at the famous credit score number.

The three big credit agencies put together the financial history of borrowers. If a consumer is late in paying a bill, or doesn't pay a debt at all, this will be noted by the store, credit card company, utility company or landlord to the credit rating agencies. The main credit agencies use all this information and use it to assign a score.

The higher this score, the higher your credit rating, and then the more likely you will be able to obtain the loan you are applying for. FICO assigns scores ranging from 300 to 850.

Each negative transaction with any of your financial partners such as a credit card company, department store, bank, etc. will be recorded. The credit agencies gather this information from all of these entities and start a file on each consumer ? taux hypotheque.

The highest score, 850, will be reduced by any poor transaction in your file. A late payment or a default or high credit balances would automatically reduce it by a certain amount. A lot of late paid billsor consistently maintaining high balances on your credit cards will result in a lower score. If there are too many of these incidents, the credit score may go down as low as 350, a level where a lender is not likely to lend you funds.

The reason for this is that any creditor will assume if you have been willing to fall behind on your credit obligations with another lender, you will be likely to do the same with him ? pret hypothecaire.

If you have only a few problems, your score will not be greatly affected, and you may still obtain a loan. Consistent late remittances and even non payments will most likely result in a very low score with little chance of obtaining a loan.