November 21,2008
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Your Credit Rating(101), Pt.2 –
– Why weight?It's important to note here, that different reporting agencies will often render different credit card scores for the same consumer. Inevitably minor differences will reflect the individual ‘weighting factors' that each agency assigns, based on their unique priorities of credit card debt worthiness. These variances should be minimal. If a large difference is found, it is almost certain that some pertinent data information is missing (this could be good or bad). The agencies don't go to any length to make sure all has been received. If the difference is detrimental to a consumer's credit card worthiness, it would behoove that consumer to correct the anomaly with the reporting agency (Equifax, Experian, and TransUnion, etc.) This is usually a hassle, but sometimes worth the effort.
So what's score? Look at the weather...whether or not you're approved (only kidding). The truth is that credit card lending climates change almost like the weather. One month the accepted approval range may start at FICO-500. The next month the economy may weaken abruptly (like now) and the minimum range will shift up to FICO-700. One of the weights used in determining a consumer's credit card rating is based on comparing that consumer to other consumers with similar characteristics. Many different characteristics are considered here, like:
a) Consumer payment history.
b) Length of consumer's credit history.
c) The number and kind of accounts a consumer has.
d) The consumer's outstanding debt.
e) The number and frequency of late payments the consumer has made.
f) The ratio of credit used compared to the amount available.
g) Severity and frequency of problems with charge-offs, collection agencies or bankruptcies the consumer has had.Obviously, the better credit characteristics raise the FICO score and allow for better qualify credit card loans. Worse characteristics make for a lower score, which may cause problems with the ability to get the best loan terms