Fair Isaac Corporation is the creator of the FICO credit score that is used today by most lenders to evaluate consumer credit risk. FICO scores range from a poor credit low of 500 to a best credit rating of 850.
The higher the FICO score the lower the interest rates offered by most lenders. For example here is a look at how FICO scores might affect a $150,000 30-year, fixed rate loan:
Score Interest Payment
720-850 5.64% $865
700-719 5.77% $877
675-699 6.30% $929
620-674 7.45% $1,044
560-619 8.53% $1,157
500-559 9.29% $1,238
Rates change frequently, but you can check the daily average at myfico.com.
Fair Isaac has extended its FICO score to cover an expanded population base. This expanded FICO coverage will tap into non-traditional sources of consumer data to assess the credit risk of adults who have minimal or no credit history on file - such as recent immigrants, people with low incomes, recent widows and divorcees, and young people.
The company has tapped into non conventional ways of establishing credit scores. People pay rent, they pay catalog companies when they order something, they pay back payday loans - there are various ways people show financial responsibility and Fair Isaac will now be gathering that information to help determine FICO scores.
An estimated 160 million Americans have documented credit histories adequate for calculating classic FICO credit scores. An estimated 50 million consumers do not. Now that will change.
For real estate investors and landlords this means that we should be able to find a few more credit worthy buyers and renters than in the past.
About The Author
Mark Walters is an investor and author. You can find his published material at http://www.CashFlowInstitute.com http://cfiblog.blogspot.com/