A credit grade is what financial institutions use to measure how a borrower will pay back a loan, credit cards, money, etc. based on the borrower’s past credit history. Credit grades can be affected by many things, such as the borrower’s existing debt and slow past payment history. Another aspect of how a lender decides to make a loan to a borrower is, the lenders take into consideration the Debt To Income ratio (DTI), the amount of the requested loan, and the current lender rate.
When you apply for credit, lenders want to know the risk they would take by lending to you. FICO (Fair Isaac & Co.) scores or credit grades are the credit scores lenders use to find out your credit risk. Each score is based on information gathered by three major credit bureaus (Experian, TransUnion, and Equifax) who keeps a credit profile about your financial history. You have three FICO scores, from each of the credit bureaus. The three FICO scores you have will affect how much and what loan terms the lenders will give you at the time of the loan.
If the information on your credit report changes, your credit scores will change as well.
Be wise when it comes to your credit score, credit scores are used when you apply for a mortgage, a car loan, a credit card or auto insurance, the rate you will receive came directly from your credit score.
Some factors lenders may look at concerning your Credit Score:
The length of established credit
Amount of credit used/verses the amount of available credit
Late payment on credit cards, loans, mortgages & sometimes utility, etc.
Negative information on a credit report: ( bankruptcies, charge-offs, collections, etc.)
Length of time at current address residence
Recent Inquiries
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