Joined: 07 Jul 2009
Joined: 23 Jun 2009
Posted: Sun Jul 12, 2009 3:02 am Post subject:
|Credit score rating-
Credit score rating is widely used by financial institutions to assess the trustworthiness of borrowers; by employers to assess the responsibility of their employees; by insurers and other businesses to decide on the type of product to offer to the customer.
Generally, FICO (Fair Isaac Corporation) score is the most widely used credit rating model in the United States and ranges from 300 to 850. The exact formula for calculating FICO credit score is not disclosed but FICO have pointed the following factors for determining credit rating and their approximate weighted contribution:
•35% - previous payment history
•30% - amount of debt owed
•15% - length of credit history
•10% - new credit obtained recently
•10% - types of credit used
Understanding A-Credit, B-Credit, C-Credit, and D-Credit Notations
Credit scores may be a little confusing to understand. Even within a FICO score there are additional ratings that may vary from lender to lender.
FICO Score Credit Valuation Letter Grades
720 + excellent A-credit
650 + good B-credit
575 + average C-credit
below 575 poor D-credit
However, as we already said, credit ratings may vary from lender to lender. Additionally, those A, B, C, D ratings can become A+, A-, etc. and what for one lender can be a B- for another could be a C+.
Bad Credit Ratings
Furthermore, A-credit, B-credit, C-credit, and D-credit will be used by subprime lenders and often refer to borrowers with FICO credit scores below 630. In that case A-credit applies to people with 580+, B-credit will be 560+, C-credit will be 530+, and D-credit will be 500+.
VantageScore Credit Rating
VantageScore was introduced by the three major credit-reporting agencies in 2006. This credit score model ranges from 501 to 990 and also assigns letters from A to F to the different credit score ranges.
Vantage Score Letter Grades