DAY 2
YOUR CREDIT SCORE
The
credit score is probably the second most important number in your life, right
behind your social security number. It’s ironic that they are intrinsically
tied together for the majority of our lives. Whatever you are planning on doing in life then
you probably are going to need to know your credit score. If you plan on owning
a home, then you will need to know your credit score, purchase a vehicle, also you will need your credit score,
insurance, student loans, even getting a job, your credit score will come into
play one way or another.
There
is some confusion over your FICO® Score and your
credit score. The FICO® Score is a number that summarizes your
credit risk. Lenders use it to make credit decisions, such as the interest rate
you get when you apply for a loan. This number is provided exclusively through
the Fair Isaac Corporation. This number is used by approximately 90% of the
lenders in the United States. FICO® Scores range from 300 to 850,
with the mean value score being right at 725. In all actuality, the most
favorable credit rates are typically extended to those with scores of 720 or
above.
Credit
score is the number assigned to person that indicates to lenders their capacity
to repay a loan. This number can be provided by a variety of sources and can
fluctuate in number and calculation methods. Perhaps you may have checked your
credit scores, then went to a car dealership or a mortgage loan officer and found
these numbers to be vastly different. The reason being is that not everyone is
using FICO® Scores to calculate your scores in the
products that they offer. The true way to get your FICO® Score is to
go to myfico.com. If you have a great FICO® Score then you will have
a good score no matter accesses your credit file. Although many new score
calculations have come out, the FICO® Score remains the most
established and well-respected among lenders. Below we have broken down how FICO®
Scores are calculated to the nearest percentile.
35%
of your score is influenced by account history (how timely you've paid)
30%
to current account usage which is that which you have actually used (how much of your credit is being used, with greater amounts causing calculations to reflect negative).
15%
to length of credit history (the longer an account has been established, the better)
10%
to new credit inquiries and accounts
10%
to the "credit mix" or variety of credit types present. (mortgage, auto, installment, etc.)
Remember to increase your score from 550 to 630 your strategy will be
DIFFERENT from someone who is going from a 680 to a 720. Why? It is like a
relay team race each guy will have to have a different strategy, because they
each have a different starting point. Also depending on what you are trying to
qualify for it will also take a different strategy. If you are going to try to
get a mortgage or a vehicle they will have to completed different strategies to
get the desired goal.
For more information feel free to contact us at 888-824-7622 or visit
us at thecreditgenius.net.
Make sure to check back tomorrow for Day 3 where we will break down the
different Credit Bureaus.
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