Qualifying For A Credit Card

Each credit card company has a particular standard of acceptable risk, and it will do its own checks in order to determine how feasible it would be to give you a revolving line of credit.

Each credit card company uses its own particular formula in order to calculate this degree of risk. Even though these formulas tend to be guarded secrets, they all depend upon similar factors. These include the following:
 

• Credit history
• Income
• Current debt load
• The length of time at one job
• Ownership of property (especially a house)
• The number of years at the same address
• How many times credit has been applied for

Most of this information comes from credit reports, which is entered into a computer, in order to calculate your score and determine whether you meet the standard of acceptance. The score decides whether you are approved or rejected.

You might ask who determines your score? It is done by the Fair, Isaac Company, and their score is called FICO. This is a numerical score that uses some 45 different criteria from your credit profile in order to arrive at a score between 350 to 900. The higher the score, the better your credit-worthiness. The score was created in the 1980s, in conjunction with the three main credit bureaus; and the purpose of this score was to rank borrowers in accordance with their responsibility to repay their

debts

.Since Fair, Isaac Company works closely with credit bureaus and lending institutes, it is important to know that the FICO score is and can be known by different names. Despite the difference in name, the procedure is always the same. Thus, Equifax calls it the Beacon Score, Experian calls it by its proper name (FICO), and TransUnion, for some reason, refers to it as the Experian Score

Remember also that a FICO score is not constant. You cannot have one score forever. It changes in order to reflect your current credit standing. Each time you apply for credit, your credit file is pulled out and the FICO model is used to evaluate your credit worthiness on that particular day. What you scored last year will not be relevant. Also, two different lenders will come up with a different score for you, depending on their own accepted standard of risk. Below is a list of items that will lower your FICO score. You should work on these items and try to improve them.