Unlocking the secrets of credit scoring presentation
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The document outlines key factors affecting FICO credit scores, including payment history, amounts owed, length of credit history, new credit, and types of credit used. It emphasizes maintaining a positive payment history, keeping credit utilization below 30%, and having a mixture of credit types to improve scores. It also provides a breakdown of credit score ranges and highlights the importance of managing accounts wisely.
Unlocking the secrets of credit scoring presentation
- 1. 1 Unlocking The Secrets of Credit Scoring by Wanda Strickfaden, president Improve Credit, LLC www.ICDebt.com
- 2. 2 Unlocking The Secrets of Credit Scoring Positive Payment History Staying below 30% of your credit limit Having an account of 12 months or older Hard Inquiries Having a good mixture of credit
- 3. 3 Payment History Approximately 35% of your FICO score is based on this category. Pay your bills on time Delinquent payments and collections can have a major negative impact on your FICO score. The longer you pay your bills on time, the better your FICO Score. Be aware of your options prior to becoming delinquent on your active accounts. Call your creditor and negotiate a payment plan. Make sure you explain that you do not want to become delinquent, nor do you want a delinquency reported on your credit report.
- 4. Amounts Owed Approximately 30% of your FICO score is based on this category. Stay below 30% of your credit limit High outstanding debt can lower your FICO Score. Don’t close unused credit cards as a short term strategy to raise your FICO score. Don’t open a number of new credit cards that you don’t need, just to increase your available credit. This option should be researched carefully prior to considering this process. 4
- 5. 5 Length of Credit History Approximately 15% of your FICO score is based on this category. A longer credit history will increase your score Your FICO Score considers the age of your oldest account, the age of your newest account and an average of all your accounts. The length of time since your accounts have been established. How long it has been since you used certain accounts.
- 6. 6 New Credit Approximately 10% of your FICO score is based on this category. Re-establishing new credit Open an unsecured line of credit with your own cash at your local credit union or bank. Pay this line of credit off every month to re-establish your credit. Note: It’s OK to request and check your own credit report and your own FICO Score with all three bureaus for free once per year. This type of pull is considered a “soft pull”; which will not decrease your credit score.
- 7. Types of Credit Used Approximately 10% of your FICO score is based on this category. Having a mixture of credit is ideal Having an installment loan, revolving account, and mortgage is considered a good mixture of credit. An installment loan can be a personal loan, or student loan. A revolving account can be a home equity line of credit, or credit card. Your FICO score also looks at the total number of accounts you have for different credit profiles; how many is too many will vary, depending on your overall credit picture. 7
- 8. 8 Credit Score Your score can range from 300 up to 850. FICO Credit Scores 300 – 639 is considered the poor range 640 – 679 is considered the average range 680 – 699 is considered the good range 700 – 850 is considered excellent range. Did you know that only 13% of the population have a credit score of 800 or above.
- 9. 9 Unlocking The Secrets of Credit Scoring Wanda Strickfaden Improve Credit Consulting Firm wanda@improvecredit.biz www.ICDebt.com Call 704-877-8739 for your credit consultation!