Article How FICO Scores Work Apr 2010

Article How FICO Scores Work Apr 2010 - www.myfico.com How...

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www.myfico.com How FICO® Credit Scores Work When you apply for credit – whether for a credit card, a car loan, or a mortgage – lenders want to know what risk they’d take by loaning money to you. FICO ® scores are the credit scores (also called credit ratings) most lenders use to determine your credit risk. You have three FICO ® scores, one for each of the three credit bureaus – Experian, TransUnion, and Equifax. Each credit score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. Your 3 FICO ® credit scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time. Taking steps to improve your FICO ® scores can help you qualify for better rates from lenders. Example The higher your FICO ® scores the less you can expect to pay for a loan. For example, on a $240,000 30- year, fixed-rate mortgage in Texas, as of April 19,2010: Your interest rate is ...and your monthly payment is 760-850 4.762% $1,254 700-759 4.983% $1,286 680-699 5.160% $1,312 660-679 5.374% $1,344 640-659 5.803% $1,409 620-639 6.348% $1,493 As you can see in this example using today’s rates in Texas, a person with a FICO ® score of 760 or better will pay $239 less per month for a $240,000 30-year, fixed-rate mortgage than a person with a FICO ® score of 620 – that’s a savings of $2,868 per year, and $86,040 for the entire loan period. You can
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This note was uploaded on 12/30/2010 for the course MIS 302f taught by Professor Staff during the Spring '08 term at University of Texas at Austin.

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Article How FICO Scores Work Apr 2010 - www.myfico.com How...

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