Z Score,T Score, Percential Rank and Box Plot Graph
Credit score
1. How to Understand FICO Score
Judyta Przyluska Schmitt
ESOL 121
April 29, 2019
2. Introduction
• The credit score is an integral part of the financial
picture for many people.
• Americans still do not understand what affects their
credit scores.
• Experts give them some general advice.
• People need to learn how to manage their money.
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3. Statistics
• 61% US consumers want to improve their credit
scores.
• 79 million Americans have subprime credit scores
(669 points or less).
• 53 million do not have enough data to generate a
credit history.
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4. Why a FICO score?
• Fair Isaac Company or
FICO developed a
mysterious formula to
calculate credit scores.
• FICO Scores are used in
over 90% of U.S. lending
decisions.
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• Lenders use this score
to determine the
likelihood that people
will be able to pay them
back.
Source: Google
5. What is FICO Score?
579 or Less
POOR
669-580
FAIR
739-670
GOOD
799-740
VERY GOOD
800+
EXCELLENT
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FICO score is a three-digit number that ranges from
300 to 850 to represent the creditworthiness of an
individual; the higher score, the lower interest rate.
Source: design Judyta Przyluska Schmitt
6. How it works?
• There are three US Credit Bureaus.
• They collect information from banks, credit unions,
credit card issuers, mortgage lenders, collection
agencies and public records to create credit reports.
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828
Great
827
Great
828
Great
Source: design Judyta Przyluska Schmitt
7. What Determines Scores?
30%
35%
10%
10%
15%
Payment
History
Amount
Owed
Length
of Credit
History
New
Credit
Types of Credit
Used
• The importance of any
one ingredient depends
on the information of
client entire credit
report.
• Credit mix comprises
10% of a FICO Score, but
it could be an influential
factor if there isn’t a lot
of other information on
customer credit report.
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Source: design Judyta Przyluska Schmitt, based on MyFICO
8. 8
People are a key part of the
credit system. Their credit
accounts are reported to the
bureaus.
Creditors request data from the
bureaus about customers when
deciding what rates to offer them.
The Credit Bureaus collect record
and distribute information about
people credit habits.
You
BureausCreditors
Account Information
Credit Reports & Scores
Source: design Judyta Przyluska Schmitt
9. How to Improve Credit Score
• Pay on Time. Automatic payments on your loans and
lines of credit will ensure you never miss a payment.
• Pay Down Debts. Bring delinquent loans current.
• Don’t Close Accounts. Pay down or pay off credit
cards, but do not close them. The available limit will
help your score.
• Avoid Multiple Cards. Do not open multiple new
lines of credit in a short period of time.
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10. Average FICO Score By Age Group
10
659
677
690
713
747
18-29 30-39 40-49 50-59 60+
Source: design Judyta Przyluska Schmitt, based on FICO data
11. Conclusion
• If people will learn recommended financial
behaviors, their credit scores will increase
automatically.
• And then….
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Source: Małopolski Związek Brydża Sportowego
12. Works Cited
Andriotis, Anna M. “How to Perfect Your Credit Score.” Dow Jones
Institutional News, Jan. 2015, ProQuest.
search.proquest.com/docview/2063193459?accountid=1599.
Bjerken, LeAnn. “Counselors: Know Your Credit Score Facts,
Myths.” Journal of Business, Spokane Vol. 33, No. 17, Aug. 16,
2018, p. B5, B7. ProQuest.
search.proquest.com/docview/2099897441?accountid=1599.
MyFICO, ”Credit Education,” myfico.com.
O'Neill, Barbara, PhD, CFP®. ”2018 Personal Finance Year in
Review.” Journal of Financial Planning Jan. 2019. p. 46-54.
Ulzheimer, John. ”What is the Average Credit Score in America?”
Dec. 10, 2018, cardrates.com/advice/average-credit-score-in-
america/ 12
