Credit Score Of 500

Credit Report Scores - Who Determines Them?

There are three major credit reporting agencies: , , and .

Each of these credit reporting agencies receives information from credit grantors such as credit card companies, stores granting credit, mortgage companies, and banks. They compile your credit history and compute your credit report scores.

They provide your history and credit report scores to others who have a genuine interest in your credit worthiness.

Often a credit score of 500 is a "cut-off" point for granting credit.

Your FICO credit score can range from a low of 300 to a maximum of 850. So you can see that a score of 500 is less than ideal.

There are many reason for wanting a higher credit score. The higher your credit score:

• The greater the number lending institutions that will handle your loan.
• The easier and faster you can get a loan.
• The larger loan you can qualify for.
• The lower your interest rate will be.

The fact is, the lower you credit score,the less likely you are to repay your loan. If you don't pay your mortgage the banks have to go through a lengthy foreclosure process. This takes time and effort for the bank--and is an expense they don't need.

Banks and mortgage companies already have a lot of "repossessed" properties on their books. Having a lot of properties that went through foreclosure does not look good for the bank. They are not likely to offer an optimal mortgage to a person will a low credit score.

You may have to resort to a "finance company". These companies are specifically organized to offer mortgages to high risk home buyers. But, they offer mortgages at higher interest rates. This will cost you considerably more money.

The best alternative you have is to take 6 months or so and work to improve your credit score.

Credit Report Scores - Computing Then

Your credit report scores are based on factors that appear in your credit reports. Credit report scores are computed based on a model developed by Fair Isaac Corporation and are typically know as FICO scores. They help lenders determine the risk of extending credit to prospective or existing borrowers.

The following general factors are considered:

• Bill payment history -- 35% of your FICO score (Good: on time and for the full amount)
• Debt relative to your credit limit -- 30% of your FICO score (Good: few installment loans, Bad: many debts, maxed out credit cards)
• Length of credit history -- 15% of your FICO score (Best, entire credit history of 7 years shows no negative reports)
• Types of credit -- 10% of your FICO score (Good: mortgage, car loans, Bad: high interest credit card debt)
• New credit -- 10% of your FICO score (Bad: many rejected applications, new accounts, or credit inquiries)

All these factors are considered in computing your credit score.

Your credit report contains personal information, credit payment history, credit inquiries made when applying for credit, collections, as well as public record information from courts such as backruptcies, foreclosures, wage attachments, liens and judgments.

Credit Report Scores - How to See Them

Each of the three credit reporting agencies can provide you with a one-time copy of your credit report. Equifax, Experian, for example, will provide your report online for a fee of $9. Trans Union charges from $7.50 to $9 for your credit report.

All three credit reporting agencies will also provide a one-time copy of a "3-in-1" credit report. This contains your credit reports and your credit report scores from all three reporting agencies. Trans Union charges $34.95 while Equifax and Experian each charge $39.95.

Credit Report Scores - Improving Then

A good score helps you get the best loans. The loan officer will be glad to see you because you will:

• Qualify for a larger loan
• Get a loan faster
• Get the best interest rates.