The Wall Street Journal recently published an article that our younger and new members will find interesting. It is not news to experienced investors.
Well worth understanding and new to many is the FICO score. Issued by Fair, Isaac and Company, an individual’s FICO score is used by most banks and other lenders to determine a borrower’s creditworthiness. In Canada, it was previously called the Beacon score.
People’s FICO score is determined by a number of factors, but an under-recognized one is based on how much of one’s available credit an individual uses each month. This is the credit-utilization rate.
An individual using 30% of available credit is a better risk than an individual using 80% of available credit, even if the latter never misses a payment.
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