SlideShare une entreprise Scribd logo
1  sur  11
Télécharger pour lire hors ligne
UNDERSTANDING YOUR CREDIT SCORE
  A guide to helping you understand your credit score




UNDERSTANDING
YOUR CREDIT SCORE

A guide to helping you
understand your credit score
UNDERSTANDING YOUR CREDIT SCORE
A guide to helping you understand your credit score




Table of Contents:
Understanding your credit score 	                               1
How much does a low score cost you 	                            2

How are credit scores calculated 	                              3
Cracking the code 	                                             7

Improving your credit score 	                                   9




                           The trusted leader in credit report repair.   Call today: 1-800-280-9121
UNDERSTANDING YOUR CREDIT SCORE
A guide to helping you understand your credit score




Understanding your credit score
Fair Isaac Corporation, based in Minneapolis, Minnesota, was founded in 1956 by Bill Fair and Earl
Isaac. They pioneered the field of credit scoring for financial companies. Over the years they have
expanded their enterprise to cover decision systems, analytics, and consulting. Every credit reporting
agency, and most lenders, calculate your credit score based on software from FICO®, a division of Fair
Isaac, or based on in-house software modeled after the FICO® rating system.

What does your credit score mean?
This rating system is meant to develop a snapshot of the risk you currently represent to a lender.
Several parameters in your credit file, including length of credit history, number of open accounts, loans,
mortgages, public records, and others are formulated to produce a three-digit score between 300 and
850. There are other scores used by lenders and insurance companies (some of which are developed
by FICO®) such as Application and Behavior scores. These other scores take other information
into account. Usually a lender will use a combination of your credit score with other factors when
determining your risk. They all have the same objective, to determine the borrower’s potential risk.
Regardless of whether the score was generated by FICO® or a system based on FICO® parameters,
they all yield an industry standard three-digit score. This score places the borrower in one of three main
categories (we named the third one ourselves).

Prime, sub-prime, and shafted
Prime: If your credit score is above 680, you are considered a “prime borrower” and will have no
problem getting a good interest rate on your home loan, car loan, or credit card.

Sub-prime: If your credit score is below 680, you are “sub prime”, and will likely pay a much higher
interest rate on your loan.
Shafted: Below 560 is the shafted score. At least that is how most lenders and credit issuers perceive
it. You can still get a credit card but you will likely be hit with a security deposit or high acquisition fees.
In addition to that, your interest rate may likely be between 15 and 23%. With this score, you can forget
about most home loans and the majority of new car loans. Below 560 is no place to be. You may pay
much, much more in higher interest and unnecessary fees. You may even pay more for your insurance
rates. A very low score may even prevent you from getting a job with many companies.




                             The trusted leader in credit report repair.     Call today: 1-800-280-9121            p. 1
UNDERSTANDING YOUR CREDIT SCORE
A guide to helping you understand your credit score




How much does a low credit score cost you?
Credit Cards: Most, if not all, prime credit cards are entirely out of reach to consumers with bad
credit. The few credit cards that are available to them (known as “sub-prime” cards) typically require
exorbitant setup fees or recurring monthly fees, offer very low credit lines, often require cash security
deposits, and in most cases do not even report your positive credit activity to the credit bureaus.

Automobile Financing: If you are making payments on a car, you are probably paying between
$2,000 and $5,000 more just for having bad credit. This added interest shows up every month in a
higher payment.

$20,000 car loan paid over 5 years

   CREDIT STATUS           RATE        PAYMENT          BAD CREDIT COST

   Excellent                7.5%       $400.75          $0.00

   Mildly Damaged           10.5%      $420.87          $1,207.20

   Damaged                  15%        $475.78          $4,501.80



Home Mortgage: Bad credit in auto financing can really hurt, but it is nothing compared to the cost
of bad credit when a home is involved. A typical home can cost between $90,000 and $250,000 more
in interest if you are buying the home with bad credit.

$200,000 mortgage paid over 30 years

   CREDIT STATUS           RATE        PAYMENT          BAD CREDIT COST

   Excellent                6%         $1,200.00        $0.00

   Mildly Damaged           8%         $1,467.00        $96,120.00

   Damaged                  11%        $1,904.00        $253,440.00




                            The trusted leader in credit report repair.    Call today: 1-800-280-9121       p. 2
UNDERSTANDING YOUR CREDIT SCORE
    A guide to helping you understand your credit score



As you can see, a low score can cost you hundreds of dollars per month. Which is why it is so important
to obtain and maintain as high a score as possible.


How are credit scores calculated?
The methods of calculating your credit score may differ slightly depending on the credit bureau. When
obtaining your score from one of the Credit Bureaus it is important to understand that your score does
not come directly from FICO®. It is adapted to each bureau and is given its own name: Equifax uses
“Beacon”, Trans Union uses “Empirica”, and Experian uses “Experian/Fair Isaac.” These scores are also
referred to as your “Bureau Scores.”

Since your score is derived from your bureau data, it will change every time your reports change.
However your score is calculated, it will always take into consideration many categories of information.
No single piece of information or factor determines your score. As the information in your credit report
changes, the importance of one or several factors may change in your credit score. Lenders look at many
things when making a credit decision, including your income and the kind of credit you are applying for.
However, your credit score does not reflect these facts as it only evaluates the information retained by
the credit reporting agency.

What factors affect your credit score?
There are 5 factors which are used in credit scoring calculations that determine your overall credit score

         Previous credit performance (payment history) 35%
A lender wants to know what your payment history is like. Have you paid everything on time, are
you late on anything now, and so on. Your payment history is just one piece of information used in
calculating your score, although it can be very important.

	        • Payment history on your accounts. These include credit cards, retail accounts (department 	
	        store credit cards), installment loans, finance company accounts, and mortgage loans.
	        • Collection items and Public records. This includes judgments, bankruptcies, suits, liens, 		
	        collection items, and wage attachments. Most of these are considered quite serious, although 		
	        older items count less than recent ones.




                               The trusted leader in credit report repair.   Call today: 1-800-280-9121      p. 3
UNDERSTANDING YOUR CREDIT SCORE
    A guide to helping you understand your credit score



	        • Negative information/late pays are determined using three factors.

	                       – Recency - How long ago was the last delinquency?
	                       How old is the late pay? A 30-day late payment made just a month ago will effect
	                       your score much more than a 90-day late payment from five years ago.

	                       – Severity - What level of delinquency was reached?
	                       How late was the payment made? 30 days, 60 days, 90 days or worst of all, is the 		
	                       payment still outstanding?

	                       – Prevalence - How many credit obligations have been delinquent?
	                       The amount of negative items as compared to your total amount of available credit. 	
	                       For instance, 5 accounts showing 3 late payments is much worse than 10 accounts 	
	                       showing 4 late payments. One of the biggest sub factors is how many accounts 		
	                       show no late payments.

         Current level of indebtedness (amount owed) 30%
How much is too much? Can the borrower pay me and still afford to pay their other bills? These are the
types of questions that most borrowers want to know and the answers are almost as important as your
previous credit history.

	        • Total amount owed on all open accounts. Paying off your credit cards in full every 		
	        month does not mean that they won’t show a balance on your report. Your total balance on your 	
	        last statement is generally the amount that will show in your credit report.

	        • Specific types of accounts, such as credit cards and installment loans are scored differently 	
	        and in conjunction with the overall amount owed on all open accounts. This also factors into your 	
	        balance on each specific type of account. For instance; you have a credit card with a very small 		
	        balance and no late payments. Even though the balance is low, this still looks very good as it 		
	        shows that you are able to manage your credit responsibly.

	        • How many accounts do you have open and how many have balances? A large
  	      number of open accounts, even with small balances, can indicate a higher risk of over-extension.
	        This is weighted in your credit score but most lenders use their own discretion as they have
	        access to your income amount. For the most part, it is good not to have too many credit card
	        accounts. For most consumers, three credit card accounts should be the maximum.


                               The trusted leader in credit report repair.   Call today: 1-800-280-9121        p. 4
UNDERSTANDING YOUR CREDIT SCORE
A guide to helping you understand your credit score




	      • How much of the total credit that is available to you are you using? In other words, 		
	      Are you close to maxing out? For example, if you have a credit card with an available credit line 		
	      of $1,000 dollars and you have a current balance of $850.00 or more, then you are nearly 		
	      “maxed out.” Several credit cards or other debts with balances approaching the credit limit 		
	      will affect your score negatively, even if you have made your payments responsibly. Your credit 		
	      score will factor your overall ratio of debt to your overall limits.

Example

                                  OVERALL RATIO

    ACCOUNT        AMOUNT OWED          LIMIT/LOAN ACCOUNT             PERCENTAGE

    Visa                 $500                    $1,000                    50%

    MasterCard            $50                    $1,000                    5%

    Car loan            $11,000                  $25,000                   44%

    Home loan           $95,000                 $145,000                   65%

    TOTAL              $106,550                 $172,000                   61%




      Amount of time credit has been in use (length of credit) 15%
Generally speaking, the longer the credit history the better the score. However, this factor only makes
up 15% of your total score so even young people, students, or others with short histories can still score
high overall as long as the other factors show well. If you are new to credit than there is little you can
do to improve this part of your score. Open an account and be patient.

	          • How long your credit accounts have been open, or the number of months you have 		
	          been in the credit bureau’s file.

	          • The age of your oldest account and the average age of all your accounts are taken into 		
	          consideration.

	          • How long it has been since you used certain accounts as well as the mix of older and 	
	          new trade lines.



                             The trusted leader in credit report repair.   Call today: 1-800-280-9121         p. 5
UNDERSTANDING YOUR CREDIT SCORE
A guide to helping you understand your credit score



     Pursuit of new credit 10%
Credit is much more popular today. Just look at the number of credit card offers you get via the internet
and in the mail. Consumers can now shop for credit and find the best terms to meet their needs. Each
time someone runs a credit check on you, it creates an inquiry.

Fair Isaac has changed some of its calculations to account for these new trends. Specifically, they treat a
group of inquiries – which probably represents a search for the best rate on a single loan – as though it
was a single inquiry (note: this only applies to auto or mortgage loan inquiries). For example, auto loan
inquiries that were within 30 days of each other count as one inquiry.

As a reasonable measure you should avoid unnecessary inquiries. The system is designed to take into
account rate shopping but things like applying for credit card offers will add inquiries to your file.high
overall as long as the other factors show well. If you are new to credit than there is little you can do to
improve this part of your score. Open an account and be patient.


     Types of credit experience 10%

A healthy mix of different types of credit include installment loans and revolving loans. Installment loans
allow you to repay the loan over a specific period of time with set monthly payments (home mortgages,
auto loans, and personal loans). A revolving loan allows you to repay the loan without a specific set of
payments and the loan remains fully open as long as you have not reached the limit of the line of credit
(retail accounts, credit cards, and home equity lines).

This score is not normally a key factor in determining your score but it can help a close score. It’s not a
good idea to try and open different types of accounts just to try and make this factor better. It will likely
reduce your score in other areas. You should never open accounts you don’t intend to use.

What type of accounts you have, and how many, can make a big difference. The optimal ratio of
installment versus revolving accounts depends on your profile and differs from person to person. One
factor that seems to have significant influence is your percent of open installment loans. Too many can
lower this portion of your score.




                            The trusted leader in credit report repair.     Call today: 1-800-280-9121          p. 6
UNDERSTANDING YOUR CREDIT SCORE
A guide to helping you understand your credit score




Cracking the code
If you are denied credit, you will receive up to four reason codes which indicate why you were denied.
These codes appear in order of importance.

The chart below is a typical readout your lender might view. This particular readout presents information
from all three credit agencies. In the example below, the individual failed to qualify for each credit
agency with the listed reasons in descending order.


  ********** BORROWER: SMITH, JOE M. *************

   TU Score: [00623]
   Reason1=[022] Reason2=[016]
   Reason3=[028] Reason4=[004]


   Experian Score: [00629]
   Reason1=[022] Reason2=[016]
   Reason3=[028] Reason4=[032]


   Equifax Score: [00617]
   Reason1=[022] Reason2=[032]
   Reason3=[024] Reason4=[004]




                            The trusted leader in credit report repair.   Call today: 1-800-280-9121        p. 7
UNDERSTANDING YOUR CREDIT SCORE
A guide to helping you understand your credit score



 CREDIT BUREAU RISK SCORE REASONS                  EQUIFAX   TRANS UNION   EXPERIAN   Please note: these codes change often and may
 Amount owed on accounts is too high                  1          1            1       not represent the current codes.
 Level of delinquency on accounts                     2          2            2

 Too few bank revolving accounts                      3          N/A          3


                                                                                      What factors affect your
 Too many bank or national revolving accounts         4          N/A          4

 Too many accounts with balances                      5          5            5

 Too many consumer finance company
 accounts
                                                      6          6            6       credit score?
 Account payment history is too new to rate           7          7            7

 Too many recent inquiries last 12 months             8          8            8
                                                                                      The three credit agencies do not always
 Too many accounts recently opened                    9          9            9       have the exact same information. Therefore
 Proportion of balances to credit limits is too
 high on bank revolving or other revolving
                                                      10         10           10
                                                                                      your three scores will differ slightly. As a
 accounts

 Amount owed on revolving accounts is too             11         11           11
                                                                                      general rule, if you fail to qualify at one
 high
                                                                                      agency you are also likely to be denied if one
 Length of time revolving accounts have been          12         12           12
 established
                                                                                      of the other bureaus is checked. Most loan
 Time since delinquency is too recent or              13         13           13
 unknown                                                                              companies will run reports from all three
 Length of time accounts have been
 established
                                                      14         14           14
                                                                                      credit agencies and take the lowest score.
 Lack of recent bank revolving information            15         15           15

 Lack of recent revolving account information         16         16           16

 No recent non-mortgage balance information           17         17           17

 Number of accounts with delinquency                  18         18           18

 Date of last inquiry too recent                      N/A        19           N/A

 Too few accounts currently paid as agreed            19         27           19

 Length of time since derogatory public record        20         20           20
 or collection is too short

 Amount past due on accounts                          21         21           21

 Serious delinquency, derogatory public record        22         22           22
 or collection filed

 Number of bank or national revolving accounts        23         N/A          23
 with balances

 No recent revolving balances                         24         24           24

 Number of revolving accounts                         26         N/A          26

 Number of established accounts                       28         28           28

 No recent bankcard balances                          N/A        29           29

 Time since most recent account opening               30         30           30
 too short

 Too few accounts with recent payment                 31         N/A          31
 information

 Lack of recent installment loan information          32         4            32

 Proportion of loan balances to loan amounts          33         3            33
 is too high

 Amount owed on delinquent accounts                   34         31           34

 Serious delinquency and public record or             38         38           38
 collection filed

 Serious delinquency                                  39         39           39
 Derogatory public record or collection filed         40         40           40




                                             The trusted leader in credit report repair.     Call today: 1-800-280-9121               p. 8
UNDERSTANDING YOUR CREDIT SCORE
A guide to helping you understand your credit score




Improving your credit score
Now that you know how your score is calculated, you can begin making changes to your current
financial planning. The best things you can do truly are simple.

	     • Pay your bills on time. Sounds simple, but this is the best thing you can do to keep your 		
	     score high. Delinquent payments and collections have a severe impact on a score.

	     • Keep your balances low on unsecured revolving debt like credit cards. High 			
	     outstanding balances may affect a score negatively.

	     • Only apply for credit that you need. The amount of your unused credit is an important 		
	     factor in calculating your score.

	     • Make sure the information in your credit report is correct. If it’s not, dispute it with 		
	     the credit agencies and/or with the creditor directly.

	     • Removing negative items on your credit report has the biggest impact on your 	 	
	     credit score. Generally, negative items stay on your credit report for seven years. Hiring a 		
	     professional firm like Lexington Law to remove negative items on your credit report can be one 		
	     of the first steps to a higher credit score. Lexington Law is the leader in credit report repair and 		
	     has helped thousands of clients quickly and legally clean up their credit reports.




Sign up today! $99 /sign up $39 /month
Call today: 1-800-280-9121 or visit www.lexingtonlaw.com



                           The trusted leader in credit report repair.     Call today: 1-800-280-9121           p. 9

Contenu connexe

Tendances

Credit Score Information
Credit Score InformationCredit Score Information
Credit Score Informationgregorav
 
Understanding credit
Understanding creditUnderstanding credit
Understanding creditNick Wolff
 
Credit scoring using Rattle and R
Credit scoring using Rattle and RCredit scoring using Rattle and R
Credit scoring using Rattle and RAyan Das
 
Bank Fee Finder - April 2017 Report
Bank Fee Finder - April 2017 ReportBank Fee Finder - April 2017 Report
Bank Fee Finder - April 2017 ReportChime Banking.
 
Individual project
Individual projectIndividual project
Individual projectsamjo1234
 
Credit Score Basics-04-17
Credit Score Basics-04-17Credit Score Basics-04-17
Credit Score Basics-04-17Barbara O'Neill
 
Use credit union credit report seminar
Use credit union  credit report seminarUse credit union  credit report seminar
Use credit union credit report seminarmullarkea
 
Unlocking the secrets of credit scoring presentation
Unlocking the secrets of credit scoring presentationUnlocking the secrets of credit scoring presentation
Unlocking the secrets of credit scoring presentationWanda Strickfaden
 
Your Guide to Getting a Perfect Credit Score
Your Guide to Getting a Perfect Credit ScoreYour Guide to Getting a Perfect Credit Score
Your Guide to Getting a Perfect Credit ScoreFundera
 
Credit and the Interest Insomniac
Credit and the Interest InsomniacCredit and the Interest Insomniac
Credit and the Interest InsomniacTodd Christensen
 
Credit Repair Education for Libraries 6.15.19
Credit Repair Education for Libraries  6.15.19Credit Repair Education for Libraries  6.15.19
Credit Repair Education for Libraries 6.15.19Victor Johnson
 
Credit Unraveling the mystery
Credit   Unraveling the mysteryCredit   Unraveling the mystery
Credit Unraveling the mysterySteve Wagner
 

Tendances (19)

Credit Score Information
Credit Score InformationCredit Score Information
Credit Score Information
 
Understanding credit
Understanding creditUnderstanding credit
Understanding credit
 
Cost of credit
Cost of creditCost of credit
Cost of credit
 
Money Matters Class 5: Credit Score
Money Matters Class 5: Credit ScoreMoney Matters Class 5: Credit Score
Money Matters Class 5: Credit Score
 
Credit scoring using Rattle and R
Credit scoring using Rattle and RCredit scoring using Rattle and R
Credit scoring using Rattle and R
 
Bank Fee Finder - April 2017 Report
Bank Fee Finder - April 2017 ReportBank Fee Finder - April 2017 Report
Bank Fee Finder - April 2017 Report
 
Money Matters Class 4, Credit
Money Matters Class 4, CreditMoney Matters Class 4, Credit
Money Matters Class 4, Credit
 
Individual project
Individual projectIndividual project
Individual project
 
Credit Score Basics-04-17
Credit Score Basics-04-17Credit Score Basics-04-17
Credit Score Basics-04-17
 
Use credit union credit report seminar
Use credit union  credit report seminarUse credit union  credit report seminar
Use credit union credit report seminar
 
Money Matters Class 6
Money Matters Class 6Money Matters Class 6
Money Matters Class 6
 
Unlocking the secrets of credit scoring presentation
Unlocking the secrets of credit scoring presentationUnlocking the secrets of credit scoring presentation
Unlocking the secrets of credit scoring presentation
 
Credit
CreditCredit
Credit
 
Your Guide to Getting a Perfect Credit Score
Your Guide to Getting a Perfect Credit ScoreYour Guide to Getting a Perfect Credit Score
Your Guide to Getting a Perfect Credit Score
 
Credit and the Interest Insomniac
Credit and the Interest InsomniacCredit and the Interest Insomniac
Credit and the Interest Insomniac
 
Credit Repair Education for Libraries 6.15.19
Credit Repair Education for Libraries  6.15.19Credit Repair Education for Libraries  6.15.19
Credit Repair Education for Libraries 6.15.19
 
Credit Unraveling the mystery
Credit   Unraveling the mysteryCredit   Unraveling the mystery
Credit Unraveling the mystery
 
Money Matters Class 3: Banking
Money Matters Class 3: BankingMoney Matters Class 3: Banking
Money Matters Class 3: Banking
 
Managing your credit personal and business
Managing your credit personal and businessManaging your credit personal and business
Managing your credit personal and business
 

Similaire à Understanding Your Credit Score

40 Credit Repair Secrets
40 Credit Repair Secrets40 Credit Repair Secrets
40 Credit Repair SecretsWilliam Lingle
 
Ultimate Credit Score Guide
Ultimate Credit Score GuideUltimate Credit Score Guide
Ultimate Credit Score GuideEric Stephenson
 
How To Build Credit Score Essay
How To Build Credit Score EssayHow To Build Credit Score Essay
How To Build Credit Score EssayLisa Riley
 
What is a Credit Score
What is a Credit ScoreWhat is a Credit Score
What is a Credit ScoreDarren De Jong
 
Funding Assessment Report
Funding Assessment ReportFunding Assessment Report
Funding Assessment ReportInfobrandz
 
Automotive Outreach Program from a Car Dealer; Life Beyond Bankruptcy
Automotive Outreach Program from a Car Dealer; Life Beyond BankruptcyAutomotive Outreach Program from a Car Dealer; Life Beyond Bankruptcy
Automotive Outreach Program from a Car Dealer; Life Beyond BankruptcyRalph Paglia
 
Understanding Your Credit Report
Understanding Your Credit ReportUnderstanding Your Credit Report
Understanding Your Credit Reportheatherviolet
 
101 Powerful Credit Tips
101 Powerful Credit Tips101 Powerful Credit Tips
101 Powerful Credit TipsFronteUnito
 
Wanda Strickfaden's unlocking the secrets of credit scoring presentation
Wanda Strickfaden's unlocking the secrets of credit scoring presentationWanda Strickfaden's unlocking the secrets of credit scoring presentation
Wanda Strickfaden's unlocking the secrets of credit scoring presentationWanda Strickfaden
 
Understanding How Your Fair Issac Credit Scores (FICO) Scores and How They Work
Understanding How Your Fair Issac Credit Scores (FICO) Scores and How They WorkUnderstanding How Your Fair Issac Credit Scores (FICO) Scores and How They Work
Understanding How Your Fair Issac Credit Scores (FICO) Scores and How They WorkAbsolute Home Mortgage Corp.
 
Top 10 Credit Mistakes
Top 10 Credit Mistakes  Top 10 Credit Mistakes
Top 10 Credit Mistakes jprichard39
 

Similaire à Understanding Your Credit Score (20)

Credit Scores
Credit ScoresCredit Scores
Credit Scores
 
What is Credit Score?
What is Credit Score? What is Credit Score?
What is Credit Score?
 
40 Credit Repair Secrets
40 Credit Repair Secrets40 Credit Repair Secrets
40 Credit Repair Secrets
 
Ultimate Credit Score Guide
Ultimate Credit Score GuideUltimate Credit Score Guide
Ultimate Credit Score Guide
 
How To Build Credit Score Essay
How To Build Credit Score EssayHow To Build Credit Score Essay
How To Build Credit Score Essay
 
Intro to Credit
Intro to CreditIntro to Credit
Intro to Credit
 
What is a Credit Score
What is a Credit ScoreWhat is a Credit Score
What is a Credit Score
 
Funding Assessment Report
Funding Assessment ReportFunding Assessment Report
Funding Assessment Report
 
Credit Score
Credit ScoreCredit Score
Credit Score
 
Credit scoring fact sheet
Credit scoring   fact sheetCredit scoring   fact sheet
Credit scoring fact sheet
 
Automotive Outreach Program from a Car Dealer; Life Beyond Bankruptcy
Automotive Outreach Program from a Car Dealer; Life Beyond BankruptcyAutomotive Outreach Program from a Car Dealer; Life Beyond Bankruptcy
Automotive Outreach Program from a Car Dealer; Life Beyond Bankruptcy
 
Understanding Your Credit Report
Understanding Your Credit ReportUnderstanding Your Credit Report
Understanding Your Credit Report
 
101 Powerful Credit Tips
101 Powerful Credit Tips101 Powerful Credit Tips
101 Powerful Credit Tips
 
Wanda Strickfaden's unlocking the secrets of credit scoring presentation
Wanda Strickfaden's unlocking the secrets of credit scoring presentationWanda Strickfaden's unlocking the secrets of credit scoring presentation
Wanda Strickfaden's unlocking the secrets of credit scoring presentation
 
Bad credit
Bad creditBad credit
Bad credit
 
Money creditlesson
Money creditlessonMoney creditlesson
Money creditlesson
 
Good Credit Score
Good Credit ScoreGood Credit Score
Good Credit Score
 
The Power of Credit
The Power of CreditThe Power of Credit
The Power of Credit
 
Understanding How Your Fair Issac Credit Scores (FICO) Scores and How They Work
Understanding How Your Fair Issac Credit Scores (FICO) Scores and How They WorkUnderstanding How Your Fair Issac Credit Scores (FICO) Scores and How They Work
Understanding How Your Fair Issac Credit Scores (FICO) Scores and How They Work
 
Top 10 Credit Mistakes
Top 10 Credit Mistakes  Top 10 Credit Mistakes
Top 10 Credit Mistakes
 

Plus de Lexington Law Firm

You Can Change Your Credit History's Future
You Can Change Your Credit History's Future You Can Change Your Credit History's Future
You Can Change Your Credit History's Future Lexington Law Firm
 
How The Government Shutdown Affects Your Credit and Finances [Infographic]
How The Government Shutdown Affects Your Credit and Finances [Infographic]How The Government Shutdown Affects Your Credit and Finances [Infographic]
How The Government Shutdown Affects Your Credit and Finances [Infographic]Lexington Law Firm
 
Have We Been Set Up For Financial Failure?
Have We Been Set Up For Financial Failure?Have We Been Set Up For Financial Failure?
Have We Been Set Up For Financial Failure?Lexington Law Firm
 
Credit Revolution: Path of the Smart Consumer
Credit Revolution: Path of the Smart ConsumerCredit Revolution: Path of the Smart Consumer
Credit Revolution: Path of the Smart ConsumerLexington Law Firm
 
The 10 Commandments of Credit Repair
The 10 Commandments of Credit RepairThe 10 Commandments of Credit Repair
The 10 Commandments of Credit RepairLexington Law Firm
 

Plus de Lexington Law Firm (6)

You Can Change Your Credit History's Future
You Can Change Your Credit History's Future You Can Change Your Credit History's Future
You Can Change Your Credit History's Future
 
How The Government Shutdown Affects Your Credit and Finances [Infographic]
How The Government Shutdown Affects Your Credit and Finances [Infographic]How The Government Shutdown Affects Your Credit and Finances [Infographic]
How The Government Shutdown Affects Your Credit and Finances [Infographic]
 
Have We Been Set Up For Financial Failure?
Have We Been Set Up For Financial Failure?Have We Been Set Up For Financial Failure?
Have We Been Set Up For Financial Failure?
 
Credit Revolution: Path of the Smart Consumer
Credit Revolution: Path of the Smart ConsumerCredit Revolution: Path of the Smart Consumer
Credit Revolution: Path of the Smart Consumer
 
Credit Repair Insider Guide
Credit Repair Insider GuideCredit Repair Insider Guide
Credit Repair Insider Guide
 
The 10 Commandments of Credit Repair
The 10 Commandments of Credit RepairThe 10 Commandments of Credit Repair
The 10 Commandments of Credit Repair
 

Dernier

Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingHenry Tapper
 
Stock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfStock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfMichael Silva
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfMichael Silva
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfAdnet Communications
 
What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI360factors
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESKumarJayaraman3
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklosbeduinpower135
 
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptxSlideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptxOffice for National Statistics
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Guillaume Ⓥ Sarlat
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Commonwealth
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...mwangimwangi222
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?Stephen Perrenod
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...Antonis Zairis
 
LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxsonamyadav7097
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent PreferencesGRAPE
 
20240315 _E-Invoicing Digiteal. .pptx
20240315 _E-Invoicing Digiteal.    .pptx20240315 _E-Invoicing Digiteal.    .pptx
20240315 _E-Invoicing Digiteal. .pptxFinTech Belgium
 
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an EntrepreneurIntroduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an Entrepreneurabcisahunter
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxPrecize Formely Leadoff
 
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdfAdnet Communications
 

Dernier (20)

Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB funding
 
Stock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfStock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdf
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdf
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
 
What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklos
 
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptxSlideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
 
Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]
 
Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...
 
LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptx
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent Preferences
 
20240315 _E-Invoicing Digiteal. .pptx
20240315 _E-Invoicing Digiteal.    .pptx20240315 _E-Invoicing Digiteal.    .pptx
20240315 _E-Invoicing Digiteal. .pptx
 
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an EntrepreneurIntroduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptx
 
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
20240314 Calibre March 2024 Investor Presentation (FINAL).pdf
 

Understanding Your Credit Score

  • 1. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score
  • 2. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score Table of Contents: Understanding your credit score 1 How much does a low score cost you 2 How are credit scores calculated 3 Cracking the code 7 Improving your credit score 9 The trusted leader in credit report repair. Call today: 1-800-280-9121
  • 3. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score Understanding your credit score Fair Isaac Corporation, based in Minneapolis, Minnesota, was founded in 1956 by Bill Fair and Earl Isaac. They pioneered the field of credit scoring for financial companies. Over the years they have expanded their enterprise to cover decision systems, analytics, and consulting. Every credit reporting agency, and most lenders, calculate your credit score based on software from FICO®, a division of Fair Isaac, or based on in-house software modeled after the FICO® rating system. What does your credit score mean? This rating system is meant to develop a snapshot of the risk you currently represent to a lender. Several parameters in your credit file, including length of credit history, number of open accounts, loans, mortgages, public records, and others are formulated to produce a three-digit score between 300 and 850. There are other scores used by lenders and insurance companies (some of which are developed by FICO®) such as Application and Behavior scores. These other scores take other information into account. Usually a lender will use a combination of your credit score with other factors when determining your risk. They all have the same objective, to determine the borrower’s potential risk. Regardless of whether the score was generated by FICO® or a system based on FICO® parameters, they all yield an industry standard three-digit score. This score places the borrower in one of three main categories (we named the third one ourselves). Prime, sub-prime, and shafted Prime: If your credit score is above 680, you are considered a “prime borrower” and will have no problem getting a good interest rate on your home loan, car loan, or credit card. Sub-prime: If your credit score is below 680, you are “sub prime”, and will likely pay a much higher interest rate on your loan. Shafted: Below 560 is the shafted score. At least that is how most lenders and credit issuers perceive it. You can still get a credit card but you will likely be hit with a security deposit or high acquisition fees. In addition to that, your interest rate may likely be between 15 and 23%. With this score, you can forget about most home loans and the majority of new car loans. Below 560 is no place to be. You may pay much, much more in higher interest and unnecessary fees. You may even pay more for your insurance rates. A very low score may even prevent you from getting a job with many companies. The trusted leader in credit report repair. Call today: 1-800-280-9121 p. 1
  • 4. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score How much does a low credit score cost you? Credit Cards: Most, if not all, prime credit cards are entirely out of reach to consumers with bad credit. The few credit cards that are available to them (known as “sub-prime” cards) typically require exorbitant setup fees or recurring monthly fees, offer very low credit lines, often require cash security deposits, and in most cases do not even report your positive credit activity to the credit bureaus. Automobile Financing: If you are making payments on a car, you are probably paying between $2,000 and $5,000 more just for having bad credit. This added interest shows up every month in a higher payment. $20,000 car loan paid over 5 years CREDIT STATUS RATE PAYMENT BAD CREDIT COST Excellent 7.5% $400.75 $0.00 Mildly Damaged 10.5% $420.87 $1,207.20 Damaged 15% $475.78 $4,501.80 Home Mortgage: Bad credit in auto financing can really hurt, but it is nothing compared to the cost of bad credit when a home is involved. A typical home can cost between $90,000 and $250,000 more in interest if you are buying the home with bad credit. $200,000 mortgage paid over 30 years CREDIT STATUS RATE PAYMENT BAD CREDIT COST Excellent 6% $1,200.00 $0.00 Mildly Damaged 8% $1,467.00 $96,120.00 Damaged 11% $1,904.00 $253,440.00 The trusted leader in credit report repair. Call today: 1-800-280-9121 p. 2
  • 5. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score As you can see, a low score can cost you hundreds of dollars per month. Which is why it is so important to obtain and maintain as high a score as possible. How are credit scores calculated? The methods of calculating your credit score may differ slightly depending on the credit bureau. When obtaining your score from one of the Credit Bureaus it is important to understand that your score does not come directly from FICO®. It is adapted to each bureau and is given its own name: Equifax uses “Beacon”, Trans Union uses “Empirica”, and Experian uses “Experian/Fair Isaac.” These scores are also referred to as your “Bureau Scores.” Since your score is derived from your bureau data, it will change every time your reports change. However your score is calculated, it will always take into consideration many categories of information. No single piece of information or factor determines your score. As the information in your credit report changes, the importance of one or several factors may change in your credit score. Lenders look at many things when making a credit decision, including your income and the kind of credit you are applying for. However, your credit score does not reflect these facts as it only evaluates the information retained by the credit reporting agency. What factors affect your credit score? There are 5 factors which are used in credit scoring calculations that determine your overall credit score Previous credit performance (payment history) 35% A lender wants to know what your payment history is like. Have you paid everything on time, are you late on anything now, and so on. Your payment history is just one piece of information used in calculating your score, although it can be very important. • Payment history on your accounts. These include credit cards, retail accounts (department store credit cards), installment loans, finance company accounts, and mortgage loans. • Collection items and Public records. This includes judgments, bankruptcies, suits, liens, collection items, and wage attachments. Most of these are considered quite serious, although older items count less than recent ones. The trusted leader in credit report repair. Call today: 1-800-280-9121 p. 3
  • 6. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score • Negative information/late pays are determined using three factors. – Recency - How long ago was the last delinquency? How old is the late pay? A 30-day late payment made just a month ago will effect your score much more than a 90-day late payment from five years ago. – Severity - What level of delinquency was reached? How late was the payment made? 30 days, 60 days, 90 days or worst of all, is the payment still outstanding? – Prevalence - How many credit obligations have been delinquent? The amount of negative items as compared to your total amount of available credit. For instance, 5 accounts showing 3 late payments is much worse than 10 accounts showing 4 late payments. One of the biggest sub factors is how many accounts show no late payments. Current level of indebtedness (amount owed) 30% How much is too much? Can the borrower pay me and still afford to pay their other bills? These are the types of questions that most borrowers want to know and the answers are almost as important as your previous credit history. • Total amount owed on all open accounts. Paying off your credit cards in full every month does not mean that they won’t show a balance on your report. Your total balance on your last statement is generally the amount that will show in your credit report. • Specific types of accounts, such as credit cards and installment loans are scored differently and in conjunction with the overall amount owed on all open accounts. This also factors into your balance on each specific type of account. For instance; you have a credit card with a very small balance and no late payments. Even though the balance is low, this still looks very good as it shows that you are able to manage your credit responsibly. • How many accounts do you have open and how many have balances? A large number of open accounts, even with small balances, can indicate a higher risk of over-extension. This is weighted in your credit score but most lenders use their own discretion as they have access to your income amount. For the most part, it is good not to have too many credit card accounts. For most consumers, three credit card accounts should be the maximum. The trusted leader in credit report repair. Call today: 1-800-280-9121 p. 4
  • 7. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score • How much of the total credit that is available to you are you using? In other words, Are you close to maxing out? For example, if you have a credit card with an available credit line of $1,000 dollars and you have a current balance of $850.00 or more, then you are nearly “maxed out.” Several credit cards or other debts with balances approaching the credit limit will affect your score negatively, even if you have made your payments responsibly. Your credit score will factor your overall ratio of debt to your overall limits. Example OVERALL RATIO ACCOUNT AMOUNT OWED LIMIT/LOAN ACCOUNT PERCENTAGE Visa $500 $1,000 50% MasterCard $50 $1,000 5% Car loan $11,000 $25,000 44% Home loan $95,000 $145,000 65% TOTAL $106,550 $172,000 61% Amount of time credit has been in use (length of credit) 15% Generally speaking, the longer the credit history the better the score. However, this factor only makes up 15% of your total score so even young people, students, or others with short histories can still score high overall as long as the other factors show well. If you are new to credit than there is little you can do to improve this part of your score. Open an account and be patient. • How long your credit accounts have been open, or the number of months you have been in the credit bureau’s file. • The age of your oldest account and the average age of all your accounts are taken into consideration. • How long it has been since you used certain accounts as well as the mix of older and new trade lines. The trusted leader in credit report repair. Call today: 1-800-280-9121 p. 5
  • 8. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score Pursuit of new credit 10% Credit is much more popular today. Just look at the number of credit card offers you get via the internet and in the mail. Consumers can now shop for credit and find the best terms to meet their needs. Each time someone runs a credit check on you, it creates an inquiry. Fair Isaac has changed some of its calculations to account for these new trends. Specifically, they treat a group of inquiries – which probably represents a search for the best rate on a single loan – as though it was a single inquiry (note: this only applies to auto or mortgage loan inquiries). For example, auto loan inquiries that were within 30 days of each other count as one inquiry. As a reasonable measure you should avoid unnecessary inquiries. The system is designed to take into account rate shopping but things like applying for credit card offers will add inquiries to your file.high overall as long as the other factors show well. If you are new to credit than there is little you can do to improve this part of your score. Open an account and be patient. Types of credit experience 10% A healthy mix of different types of credit include installment loans and revolving loans. Installment loans allow you to repay the loan over a specific period of time with set monthly payments (home mortgages, auto loans, and personal loans). A revolving loan allows you to repay the loan without a specific set of payments and the loan remains fully open as long as you have not reached the limit of the line of credit (retail accounts, credit cards, and home equity lines). This score is not normally a key factor in determining your score but it can help a close score. It’s not a good idea to try and open different types of accounts just to try and make this factor better. It will likely reduce your score in other areas. You should never open accounts you don’t intend to use. What type of accounts you have, and how many, can make a big difference. The optimal ratio of installment versus revolving accounts depends on your profile and differs from person to person. One factor that seems to have significant influence is your percent of open installment loans. Too many can lower this portion of your score. The trusted leader in credit report repair. Call today: 1-800-280-9121 p. 6
  • 9. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score Cracking the code If you are denied credit, you will receive up to four reason codes which indicate why you were denied. These codes appear in order of importance. The chart below is a typical readout your lender might view. This particular readout presents information from all three credit agencies. In the example below, the individual failed to qualify for each credit agency with the listed reasons in descending order. ********** BORROWER: SMITH, JOE M. ************* TU Score: [00623] Reason1=[022] Reason2=[016] Reason3=[028] Reason4=[004] Experian Score: [00629] Reason1=[022] Reason2=[016] Reason3=[028] Reason4=[032] Equifax Score: [00617] Reason1=[022] Reason2=[032] Reason3=[024] Reason4=[004] The trusted leader in credit report repair. Call today: 1-800-280-9121 p. 7
  • 10. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score CREDIT BUREAU RISK SCORE REASONS EQUIFAX TRANS UNION EXPERIAN Please note: these codes change often and may Amount owed on accounts is too high 1 1 1 not represent the current codes. Level of delinquency on accounts 2 2 2 Too few bank revolving accounts 3 N/A 3 What factors affect your Too many bank or national revolving accounts 4 N/A 4 Too many accounts with balances 5 5 5 Too many consumer finance company accounts 6 6 6 credit score? Account payment history is too new to rate 7 7 7 Too many recent inquiries last 12 months 8 8 8 The three credit agencies do not always Too many accounts recently opened 9 9 9 have the exact same information. Therefore Proportion of balances to credit limits is too high on bank revolving or other revolving 10 10 10 your three scores will differ slightly. As a accounts Amount owed on revolving accounts is too 11 11 11 general rule, if you fail to qualify at one high agency you are also likely to be denied if one Length of time revolving accounts have been 12 12 12 established of the other bureaus is checked. Most loan Time since delinquency is too recent or 13 13 13 unknown companies will run reports from all three Length of time accounts have been established 14 14 14 credit agencies and take the lowest score. Lack of recent bank revolving information 15 15 15 Lack of recent revolving account information 16 16 16 No recent non-mortgage balance information 17 17 17 Number of accounts with delinquency 18 18 18 Date of last inquiry too recent N/A 19 N/A Too few accounts currently paid as agreed 19 27 19 Length of time since derogatory public record 20 20 20 or collection is too short Amount past due on accounts 21 21 21 Serious delinquency, derogatory public record 22 22 22 or collection filed Number of bank or national revolving accounts 23 N/A 23 with balances No recent revolving balances 24 24 24 Number of revolving accounts 26 N/A 26 Number of established accounts 28 28 28 No recent bankcard balances N/A 29 29 Time since most recent account opening 30 30 30 too short Too few accounts with recent payment 31 N/A 31 information Lack of recent installment loan information 32 4 32 Proportion of loan balances to loan amounts 33 3 33 is too high Amount owed on delinquent accounts 34 31 34 Serious delinquency and public record or 38 38 38 collection filed Serious delinquency 39 39 39 Derogatory public record or collection filed 40 40 40 The trusted leader in credit report repair. Call today: 1-800-280-9121 p. 8
  • 11. UNDERSTANDING YOUR CREDIT SCORE A guide to helping you understand your credit score Improving your credit score Now that you know how your score is calculated, you can begin making changes to your current financial planning. The best things you can do truly are simple. • Pay your bills on time. Sounds simple, but this is the best thing you can do to keep your score high. Delinquent payments and collections have a severe impact on a score. • Keep your balances low on unsecured revolving debt like credit cards. High outstanding balances may affect a score negatively. • Only apply for credit that you need. The amount of your unused credit is an important factor in calculating your score. • Make sure the information in your credit report is correct. If it’s not, dispute it with the credit agencies and/or with the creditor directly. • Removing negative items on your credit report has the biggest impact on your credit score. Generally, negative items stay on your credit report for seven years. Hiring a professional firm like Lexington Law to remove negative items on your credit report can be one of the first steps to a higher credit score. Lexington Law is the leader in credit report repair and has helped thousands of clients quickly and legally clean up their credit reports. Sign up today! $99 /sign up $39 /month Call today: 1-800-280-9121 or visit www.lexingtonlaw.com The trusted leader in credit report repair. Call today: 1-800-280-9121 p. 9