Since FICO scores places a value of the types of accounts that an individual holds and also the individual?s credit history, those who have declared bankruptcy may have really low FICO scores. FICO scores are used by most finance institutions as a basis for credit or loan approval. One's creditworthiness may be measured through FICO scores.
The FICO scoring scale runs from 300 to 850 and most people have scores that range between 600 and 800. Those with scores of 720 or higher are more favored to acquire loans with reasonable interests on mortgages as supported by a number of finance data. Those whose FICO scores are below 620 are subject to a much tedious process of reviewing prior to credit approval. Those who have declared bankruptcy usually get FICO scores lower than 600, which makes it quite hard for those who have declared bankruptcy to acquire credit.
When one considers how FICO scores are calculated, several factors which are also elements that one takes into account when declaring bankruptcy are quite similar. One?s payment history or his ability to pay his dues on time is one of the key factors that credit managers consider when calculating for FICO scores. One's frequent inability to pay on time is one of the precursors which may (although not always) lead to bankruptcy. Bankruptcy may be characterized by having more debt that the credit limit. This is also one of the considerations that is considered by FICO scores. One?s credit history , the types of credit that the individual uses and even the number pf inquiries that the individual has regarding credit are also considered when computing for one?s FICO scores in the same way that these are considered by those who declare bankruptcy.
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