Credit scores (FICO scores) are based on information collected by the credit bureaus and information reported monthly by your creditors in reference to the balances you owe and the timing of your payments. A credit score is a gathering of all this information converted into a number that helps a lender determine the likelihood that you will repay the loan on time. The credit score number is generated by the credit bureau and not by the lender. Credit scores are calculated by comparing your credit history with millions of other consumers.
A number of things affect your credit score, and those include your payment history, your outstanding obligations, the length of the time you have had outstanding credit, the types of credit you use, and the number of inquiries that have been made about your credit history in the recent past.
Credit scores range from approximately 300 to 900. The higher the credit score, the lower the risk. Credit score will also impact the loan level adjustments and pricing of your loan.
What is a FICO score and how does it impact my loan application?
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