Understanding Credit Scoring

CREDIT SCORNG HIGHLIGHTS 
By definition, a credit score is a mathematical model that evaluates many types of information in a credit file. It indicates the likelihood that a person will make payments on time. The higher the score, the less risk.

Various factors determine a credit score. – see below

Each factor carries a certain percentage that determines a credit score. Credit Scores vary from industry to industry – Each have their own criteria. This is based on the mortgage industry model to calculate your credit score.

35% Based on Payment History ? Recent Delinquency, Frequency, Severity
30% Revolving Debt Ratio ? Credit Cards / Department Stores – Balance
33% of Credit Limit 15% Credit History ? Number of Credit Cards / Length of time opened.
10% Inquiries ? 7 – 10 inquiries for the last 12 month period permitted.
10% Types of Credit Trades ? A mix of types of trade is a positive factor. (Mtg, auto loans, credit cards)

DO
1. Know your credit facts and consumer rights
2. Pay bills on time!!
3. Keep balances on credit cards under 33%
4. Watch inquiries – excessive inquiries diminish rating (loan shopping)
5. Ask creditor for 1 time courtesy to remove late date
6. Negotiate collections beginning at 30%

DO NOT
1. Do not borrow from High Risk finance companies
2. Do not close revolving accounts
3. Do not pay off old collections before pulling credit
4. Do not open any new credit before a new loan
5. Open small equity lines

FOR THE CONSUMER FREE - ALL THREE BUREAUS – FREE WWW.ANNUALCREDITREPORT.COM **This is the only site sponsored by all three national bureaus. This site allows you to dispute… no more waiting for file to be mailed to you! DO NOT buy scores! This is a consumer score! NOT A MORTGAGE SCORE