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Because The Equal Credit Opportunity Act prohibits
creditors from considering personal information
such as race, sex, marital status, national
origin, or religion when they are in the process
of determining your credit worthiness, lenders
have turned to a fair and balanced mathematical
Credit Scoring System formula that automatically
determines your credit risk by calculating a
credit score based upon your debt load,
payment performance, and other criteria.
The most commonly used
credit scoring system is called the FICO Score
which was created by Fair, Isaac and Company.
FICO scores run between a low of 300 and a high of
850. The higher the score, the better you look to
creditors.
Not only does your FICO score determine whether or
not you will be granted credit, many lenders use
this credit scoring system to determine how much
interest you will be charged. The higher your
score, the lower the interest.
Your credit score can change regularly depending
upon the criteria that a particular credit scoring
system uses. The most common reason for your score
to change is that you have either raised or
lowered your outstanding debt or you have changed
a payment pattern for better or worse. |
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