November 21,2008
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Your Credit Rating(101), Pt.1 –
– Scores of scores; what's the difference?This little-known yet, all-important credit card term is so confusing to most that we try to just ‘do the right thing' and than hope for the best. It is transparently accessed in our behalf is so many ways that we are never even given privy as to the effect that it has on our lives. Still, most of us are continually inundated by ploys for free* (*$9.95 a month) access and monitoring just to find out what ours is. There are some regulations that require a free peak at our score when we're turned down for a loan or, in some cases, for a credit card account. The problem is that it is so confusing that most of us give up from the get-go for all the work it involves. For those who have credit card accounts with the former WaMu issuing bank (now JP Morgan-Chase), you can check out your FICO rating free at any time from your personal online account page.
A very desirable FICO credit rating is generally around the 800's (the range is from 300 to 850). Perhaps because of the recent turmoil in the credit card industry, the guidelines seem to be getting more strict or, at least, a closer looking glass is being used to rate credit card holders. As a result, many scores are being lowered. The FICO score measures credit worthiness. A risk-assessment, if you will, this rating projects a consumer's likelihood of defaulting on moneys they borrow from loans. Those with higher ratings will be offered the ‘sweet deals'. Deals like lower interest rates, higher credit limits, better options (Air Miles, cash added back into your account) and, above all, being offered credit in the first place.
While there are a few different varieties of credit scores going around, some are more focused than others. A FICO (Fair Isaac and Company) score factors in specific rating data from individual lenders of a given consumer, based on each lender's experience with that consumer. FICO scores are used by all three major credit reporting agencies: Equifax, Experian, and TransUnion. The ‘Bankcard Industry Option' FICO score is even more specific to the credit card industry. Here are a few guidelines: