Credit and You

June 22, 2016, 11:49 am Posted by: Lori Askins Category: Credit Repair

Often people hear the word “credit”, “good credit”, “bad credit”, “credit score”, “FICO”, but have no idea what these words actually mean. When you search the internet for answers, you are often misled because websites will contradict each other. In order to gain a better understanding of these words, BRFinance Solutions has written a simple article without the nonsense or any inaccuracies.

There are 5 factors that determine a person's FICO score ; payment history, credit utilization, length of credit history, and new credit and credit mix.

But what does that actually mean?

When someone is discussing a person’s credit, the accountability of the person is being discussed. In other words, how likely you are to pay back the money you borrowed as agreed. In order to determine your likeliness the following questions may arise -
Did you pay back the money when it was due? (i.e. payment history which comprises 35% of your FICO score)
Are you only paying the interest (fee charged to borrow the money) or are you paying back the principle (the money that was borrowed without any fees for doing so) as well?

Related: How Does Credit Repair Work?

How much do you actually owe in relation to how much money you are allowed to borrow? FICO views people who max out their credit cards or get very close to their credit limits as people who are not responsible. This answer affects 30% of your FICO score.
Also, what is your current income and how long have you worked at the job? As well as how long have you had a credit score, credit cards and how long since the last action taken? (This answer comprises 15% of your FICO credit score.)
Last, but not least, how many credit cards do you have? Did you apply for them all at once? Do you have debt spread across all those cards and are you able to pay them regularly and on time? The answer to new credit and credit mix each affects 10% of your credit score.

After these questions are answered, you are deemed to have either “poor credit”, “good credit”,“excellent credit” or anything in between based upon a three digit number that you were assigned. This number is known as your FICO (Fair Isaac Corporation) score a.k.a. credit score. Good credit is then defined as someone who not only pays back the money on time, but also pays more than the minimum monthly payment and has not maxed out the amount of money that can be borrowed. The term “good credit” is then given a number. A person with “poor credit” may have missed payments, only pays the minimum monthly payment, had too many “hard” inquiries (businesses checking your credit history) versus “soft” inquiries* which don’t affect your credit. A person with “excellent credit” demonstrates to lenders that you not only pay on time, but pay more than the minimum amount and pay it back quickly.

Once you are aware of these terms and what they mean it is a good idea to find out your current credit score. This way you know which category you fit into and can improve your credit score if necessary. In order to obtain your FICO score, you can go to and find out today.

Do you fall into the nations’ average category, or are you above or below? Questions? Comments? Concerns? Write to us below.

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