Question

One's FICO score depends on his ability and willingness to repay the borrowed money True False

Answer 1

In the todays world, credit plays an important role. Credit score takes into account the credit history of an individual and analyses his/her ability to pay on such basis .

A FICO score is a type of credit score created by the Fair Isaac Corporation. Financial institutions use borrowers' FICO scores along with his/her credit reports for the purpose to determine the credit risk and determine whether to extend further credit or not .

FICO scores take into account various factors in five areas to determine credit worthiness:

1> Payment history

2> Current level of indebtedness

3> Types of credit used

4> Length of credit history

5> New credit accounts.

FICO scores range between 300 and 850. scores above 650 is considered good credit history. On the other side, scores below 620 often find it difficult to obtain financing at favourable rates ( will be charged a higher rate ).

To determine credit worthiness, lenders take a borrower's FICO score into account but also consider other details such as income, how long the borrower has been at his job and type of credit requested.

To determine credit scores, the Fair Isaac Corporation (FICO) weighs each category differently for each individual. However, in general, payment history is 35% of the score, accounts owed is 30%, length of credit history is 15%, new credit is 10% and credit mix is 10%.

Thus we can say any credit crore of any individual depends upon ability and willingness to repay the borrowed money , which can be assessed through different methods , taking individual's historical and current data into consideration . Thus , we can conclude above statement is True .