What is a credit score and what is it designed to do?

• A credit score number is called a FICO score, named for the Fair, Isaac and Co., the California Company that developed the system upon which it is based.
• The FICO score is the single best summary score of one's credit worthiness.
• The score is supposed to distill all the information in your credit report, using a formula to calculate a single number that indicates your credit worthiness.
• It is designed to give lenders a fast, accurate prediction of the risk involved in giving you a loan. Lenders have attested to the score's value in streamlining the underwriting process and creating more opportunities for consumers to get mortgages.
• Scores range from the 300s to about 850, with the vast majority of folks falling in the 600s and 700s- the higher the score, the better.

     What factors determine my credit score?

• 35% is based on your payment history for all accounts. Past delinquency: People who have failed to make payments in the past tend to do the same in the future.

• 30% is based on the amount you owe, especially revolving accounts. Someone who is maxed out or close to the limit on a credit card is considered a greater risk than someone who does not look at the high credit line as a license to print money.
• 15% is based on how long you have been using credit. The age of the credit file: Fair, Isaac's model assumes people who have had credit for a long time are less risky.
• 10% is based on your application for new credit. The number of times a person asks for credit: The system frowns upon those who have initiated several requests for credit cards, loans or other debt instruments over a short period.
•  10% is based on the types of credit used. A customer's mix of credit: Someone with only a secured credit card is generally riskier than someone who has a combination of installment and revolving loans. (On installment loans, a person borrows money once and makes fixed payments until the balance is gone, while revolving borrowers make regular payments, each of which frees up more money to access.)

     Why would knowing your credit score help?

 To learn more about credit scores and credit issues:

www.ftc.gov/bcp/conline/pubs/credit/crdright.htm

Great information about consumer credit and Identity theft.

http://www.federalreserve.gov/consumers.htm

Do you need information on credit repair?

www.ftc.gov/bcp/conline/pubs/credit/repair.htm

 PDF File:    www.ftc.gov/bcp/conline/pubs/credit/repair.pdf  

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Please feel free to call us, we will be happy to make an appointment and go over your credit issues.