Understanding FICO SCORES
• FICO scores are your credit rating
• Most lenders base approval on them
• They range from 300-850, higher is better
• Higher scores mean lower interest rates
• Most lenders base approval on them
• They range from 300-850, higher is better
• Higher scores mean lower interest rates
FICO scores are calculated based on your rating in five general categories
What actions will hurt the score?
What doesn’t affect the score?
Approximate credit weight for each year.
How to improve the score?
• Missing payments (regardless of $ amounts… It takes 24 months to restore credit of one late pay)
• Credit cards at capacity (i.e. maxing out credit cards)
• Closing credit cards out
• Shopping for credit excessively
• Opening up numerous trades in a short time period
• Having more revolving loans in relation to installment loans
• Borrowing from finance companies
• Transferring Balances
• Credit cards at capacity (i.e. maxing out credit cards)
• Closing credit cards out
• Shopping for credit excessively
• Opening up numerous trades in a short time period
• Having more revolving loans in relation to installment loans
• Borrowing from finance companies
• Transferring Balances
• Debt ratio
• Income
• Length of residence
• Length of employment
• Criminal Record or Personal Information
• Income
• Length of residence
• Length of employment
• Criminal Record or Personal Information
• 40% = current to 12 months
• 30% = 13-24 months
• 20% = 25 – 36 months
• 10% = 37+ months
• 30% = 13-24 months
• 20% = 25 – 36 months
• 10% = 37+ months
• Pay down on credit cards
• Do not close credit cards because capacity will decrease
• Continue to make payments on time (older late pays will become less significant with time)
• Slow down on opening new accounts
• Acquire a solid credit history with years of experience
• Do not close credit cards because capacity will decrease
• Continue to make payments on time (older late pays will become less significant with time)
• Slow down on opening new accounts
• Acquire a solid credit history with years of experience