Credit and Debt Statistics
Credit and debt statistics that were released at the end of 2007 show that more and more people are in debt than ever before. Many of these people are struggling with their debt which is proving problematic when they need credit for a mortgage, a car or other personal needs.
A result of Americans increasing debt load is that more and more people are adding to the bad credit statistics picture. To compound the problem, some statistics report as many as 79% of all credit reports (that's about 160 million reports from any one bureau!), contain numerous errors! And on top of this, 25% of them were severe errors that greatly damaged people's real credit worthiness!
The statistic referred to is a credit score, which is a number based on an analysis of a person's credit report. The score is used to represent the creditworthiness of the person, and is based on information furnished from the three major reporting bureaus (Experian, TransUnion and Equifax).
FICO is the most widely used score model in the United States. The FICO score is primarily used in credit decisions made by banks and other providers of secured and unsecured credit. Banks and other institutions use those scores when making their lending decisions.
FICO scores are determined by a number of factors, and are weighted according to the degree that each factor affects the creditworthiness of the person. The weight applied to the factors used are:
• 35% - punctuality of payment in the past (only includes payments later than 30 days past due)
• 30% - the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
• 15% - length of history
• 10% - types of credit used (installment, revolving, consumer finance)
• 10% - recent search for credit and/or amount of credit obtained recently
FICO reports the breakdown of the general population's FICO scores as follows:
• Less than 1% score under 500
• 5% score 500 to 549
• 7% score 550 to 599
• 11% score 600 to 649
• 16% score 650 to 699
• 20% score 700 to 749
• 29% score 750 to 799
• 11% score 800 or more
If your FICO score falls below 600, you are contributing to the bad credit statistics. Lenders may deny you credit, charge higher interest rates, demand more collateral, or require extensive income and asset verification.
A result of Americans increasing debt load is that more and more people are adding to the bad credit statistics picture. To compound the problem, some statistics report as many as 79% of all credit reports (that's about 160 million reports from any one bureau!), contain numerous errors! And on top of this, 25% of them were severe errors that greatly damaged people's real credit worthiness!
The statistic referred to is a credit score, which is a number based on an analysis of a person's credit report. The score is used to represent the creditworthiness of the person, and is based on information furnished from the three major reporting bureaus (Experian, TransUnion and Equifax).
FICO is the most widely used score model in the United States. The FICO score is primarily used in credit decisions made by banks and other providers of secured and unsecured credit. Banks and other institutions use those scores when making their lending decisions.
FICO scores are determined by a number of factors, and are weighted according to the degree that each factor affects the creditworthiness of the person. The weight applied to the factors used are:
• 35% - punctuality of payment in the past (only includes payments later than 30 days past due)
• 30% - the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
• 15% - length of history
• 10% - types of credit used (installment, revolving, consumer finance)
• 10% - recent search for credit and/or amount of credit obtained recently
FICO reports the breakdown of the general population's FICO scores as follows:
• Less than 1% score under 500
• 5% score 500 to 549
• 7% score 550 to 599
• 11% score 600 to 649
• 16% score 650 to 699
• 20% score 700 to 749
• 29% score 750 to 799
• 11% score 800 or more
If your FICO score falls below 600, you are contributing to the bad credit statistics. Lenders may deny you credit, charge higher interest rates, demand more collateral, or require extensive income and asset verification.
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