5 Fascinating Things You (Probably) Didn’t Know About Credit Scores

You’ve heard the old adage about how “knowledge is power,” and perhaps nothing demonstrates this saying more than when it comes to knowing about your credit information. Yes, the more you know about these details of your consumer history and you’re able to make better decisions when it comes to your future behavior.

First and foremost, it’s important to know your credit score, but it’s never a bad idea to brush up on some of the more intricate details that shape your score.

Here’s a look at five things you probably didn’t know about credit scores:

5 Interesting Credit Score Facts

  1. The big 5: Do you know the five factors that go into calculating your credit score? You should! Payment history is the largest single factor, worth 35 percent of your score. It validates the importance of paying your bills on time. Credit utilization ratio is next, at 30 percent. For a good lender-friendly ratio, keep it at 30 percent or less. Length of credit history factors into 15 percent of the score, and new credit and your credit mix each account for 10 percent of the score.
  2. 700: That’s the credit score of the average U.S. adult. A score of 700 is considered to be in the “good” category. This “good” category applies to scores between 670 and 739.
  3. Do you know your score? If you don’t know your score, you aren’t alone. In fact, it’s estimated that three out of every five Americans don’t know what their credit score is. That’s 60 percent of the country, and there’s really no excuse for it based on how important that three-digit number is to your purchasing power and how easy it has become to access.
  4. Credit report doesn’t equal credit score: Up to 20 percent of all credit reports contain some sort of error. That’s why it’s a good idea to utilize your right to obtain a free annual credit report. But contrary to what many believe, checking your credit report doesn’t permit you access to your actual credit score. We know it seems odd, but that’s the way it works. To get your score, check your credit card statements, subscribe to a free credit check website or talk to your bank or credit union.
  5. Late payments can do terrible things to your score: As we noted above, payment history is the largest consideration factor when it comes to calculating a credit score. Noting this, it probably doesn’t surprise you that late or skipped payments don’t bode well for your score. But what you may be surprised to learn is just how hurtful they can be. In fact, a 30-day late payment could cause your credit score to dip an entire 100 points! The lesson: Pay your bills on time!
Managing Credit

Vantage Scoring Model Updates- Everything you need to know.

Everything You Need to Know About the New Vantage Scoring ModelThe FICO credit score model has been used for decades. But there is mounting evidence that the model is outdated and does not accurately represent the credit-worthiness of Latino, African-American and young home buyers. Critics are calling for new ways to measure credit-worthiness, and the VantageScore 3.0 is a popular option.

What Is Wrong With the Old Model?

The current models lock out a lot of potential buyers who don’t have high FICO scores but who could still be relied on to pay their mortgage. People who do not have recent installment loan or credit card information suffer lower FICO credit scores. Smaller institutions like credit unions, payday lenders and subprime lenders may not properly report loan repaying information that would boost scores. By using a more up-to-date model, more people would have a chance to borrow for a home. Fannie Mae and Freddie Mac are considering allowing use of one more modern model, VantageScore 3.0.

Things to Know About The new Vantage Scoring Model

The new VantageScore will range between 300 and 850, which is the numerical scale used by other credit scoring models. If a borrower had a score between 501 and 570 under the old VantageScore model, he or she would have a score between 300 and 508 in the new one; this is a low score that indicates a bad credit risk. Someone who had a score between 851 and 870, however, would be considered an average borrower with a score between 763 and 780.

Your VantageScore is drawn from information that includes public records, credit inquiries, collections and credit accounts. Information from the past two years are considered the most important. Different credit use behaviors have different weights of influence on your score. The most important factors are:

  • Your payment history (40% of your score)
  • Depth of credit; that is, how much information is available (21% of your score)
  • Credit utilization (20% of the score)
  • Your credit balances (11%)
  • Your recent credit use (5%)
  • Your available credit (3%)

The VantageScore 3.0 leaves out a lot of information that hurt people in older scoring models. Any account that was in collections that has been paid in full is not counted. Less credit history is needed to calculate a person’s credit score, which means that more people are able to get access to credit sooner. This is a feature that can open credit opportunities for 30 million people. People who are victims of natural disasters are protected against negative credit records that can occur after such an event. The VantageScore’s reason codes are far more transparent, letting people know what has to happen for them to improve credit scores.

While the scoring method is the same for all bureaus, you may wind up with different VantageScores from the three credit reporting agencies. This is because they each use internal data that can contrast with what the other bureaus have.

The way to achieve a good credit score is pretty straightforward and similar to the classic advice. To get the highest score and get access to the best lending opportunities:

  • Make all of your payments on time every month. This factor is weighted heavily in your VantageScore, so it has the most influence on your ability to get a loan.
  • Keep your credit card balances low. When creditors see that you have used up a lot of your extended credit, it can look like you are not able to handle money responsibly.
  • Only apply for credit when you need it. This way, new inquiries are not drawing down your credit score.

Fico vs. Fako – Credit Tips

“What is my real credit score? Really!”

10.24.2014 Key Credit Repair

This is a very common subject we cover and one of the most confusing thing in the credit industry. What are my real scores? How are they really calculated? Well, let me tell you. It’s more complicated then you might think. With the introduction of the Vantage score by transunion and the credit plus score by experian it just become a little bit more complicated.

Client: “I pulled my credit report online and the score my loan officer pulled up was completely different?”

Yes, there are multiple credit scoring formulas. The industry standard remains FICO but consumers are no longer given access to all 3 FICO scores (experian, equifax & transunion).

Click to read an article recently posted on msnbc https://keycreditrepair.com

Remember, if you are in the market for a mortgage or any other loan product you can always review the details of your report by going to www.annualcreditreport.com but remember, only your lender can access all 3 fico scores. Start the process early so if you find that your FICO scores are too low you can quickly work on getting things up to par. It is truly never too early. The process of purchasing a home could take months and in some cases years. It is much better to be prepared early then trying to scramble to fix your credit after you’ve found a home.

Understanding FICO Scores For a Mortgage

Obtain a mortgage loan and you’ll soon come to be familiar with FICO scores. Below you will find a guide on the infamous FICO racking up procedure. This  is the primary scoring formula used by fannie and freddie mac, the goverment agencies that insure and underwrite 80% of the mortgages in the United States.

FICO ratings are simply an algebraic portrayal of your credit document. Credit rating documents are just a recording of your possessions and financial obligations. Credit card equilibriums, for example, are a financial obligation that shows up on your credit history record, as do late repayments, bounced checks and more. Credit, obviously, is a substantial consideration in the mortgage loan process.

A “credit score” is a figure that stands for an overall evaluation of exactly how you handle credit rating and also the danger degree associated with offering you a lot more credit rating, to wit, a home loan. The funding underwriter will evaluate your credit rating guide for products such as settlement record on financial obligations, financial obligation balances and also sorts of credit rating you currently have. A summary of this information is stood for by an amount called you “FICO score.”.

FICO.

You may be shocked to discover that “FICO” does not mean any credit-related terms. Rather, it represents Exhibition, Isaac and Company. This company produced the algebraic formula that creates the much loved or disliked FICO credit scores. The FICO rating assigned to you determines whether you love or hate the formula.

FICO credit scores been available in a variety of three figure numbers. The most affordable FICO credit score you can get is 350. The highest FICO score is 850, a score for which lenders will bow at your feet. The higher your score, the much better your credit situation and the most likely a banking is to supply you with a mortgage loan.

Lots of people do not have excellent credit. To this end, we discover lots of people have FICO scores varying from the low 600s to the high 700s. Mortgage applications typically are not turned down due to a couple of late repayments.

You should always attempt to pre-qualify for a mortgage financing if you’re considering purchasing a residence. Getting a reading of your FICO credit score should be among the initial steps.

FICO credit scores are merely an algebraic portrayal of your credit rating record. The FICO score designated to you establishes whether you despise the formula or enjoy.

The greatest FICO credit score is 850, a score for which bankers will bow at your feet. To this end, we find many individuals have FICO scores ranging from the low 600s to the high 700s.

For more information and a breakdown of how FICO scores work and how they can affect your mortgage approval you can contact our office at 877-842-5215 (toll free) or fill out the form below to request a consultation at a later time.

Nikitas Tsoukalis, President

Key Credit Repair

877-842-5215 Toll Free

info@keycreditrepair.com

Credit Repair Company