Credit Information

 Why is a good credit score important?

• Better loan terms
• Home purchase
• Employment
• Car Insurance
• Apartment
• Cell phones
• Utilities

 Credit Score Mystery

• "Your score" refers to a current FICO score
• FICO Score - (Fair Isaac Corp) a score produced by software which is provided to lenders by credit bureaus.
• Exact software model kept secret to protect financial status
• Only calculated if enough recent information has been collected to produce a score.
• Open six months or longer

 We Have 3 FICO Scores!

• "There are three different FICO score models by Fair Isaac - one at each main US credit reporting agencies.
• Same basic product, different names

 A Credit Bureau is...

• Company that collects consumer financial info
• Sells it in the form of credit reports
• Assigns score based on credit behavior history
• Maintains lifetime records of millions of consumers' credit history

 Keys to a Good Score

• How bills are paid
• Amounts owed vs. available credit lines
• New credit applications
• Mix of credit products
• Age/length of established accounts

 A Credit Score Is...

• "Numerical value between 300-850
• Number that sums up your credit report and risk to a lender
• The higher the credit score, the less risk
• Less risk = best loan terms and interest rates

 The US Average Credit Score Breakdown

• 1%     499 and below
• 5%     500-549
• 7%     550-599
• 11%   600-649
• 16%   650-699
• 20%   700-749
• 29%   749-799
• 11%   800 and above

 What's on a Credit Report?

• OFAC
• Credit Score
• Identification: name, address, SSN, birth date, employment
• Public Records: bankruptcy, tax liens, garnishments, foreclosures, lawsuits and judgments
• Collection Items: unpaid bills turned for collection
• Credit History: past credit accounts to most recent, with current balances, monthly payments, payment history, date opened or closed, original loan amount, credit limit
• Credit Inquiries: past 24 month period, voluntary and involuntary

 Credit Report Timeline

• Updated every 30 days
• Positive Info: Indefinitely
• Bankruptcies: 7 - 10 years
• Public Records: 7 years
• Inquiries: 2 years
• Inactive/closed: Cycle off

 What is a Credit Score Based On?

• 35% Payment History
  • Payment History: how late, how much owed, and how recent.  60 days late does not have as much impact as 90 days late.
  • How recent and frequent count: 60 days late a month ago will have more impact than a 90 day late payment 5 years ago
  • Postive payment history: on most of your accounts will increase score!
• 30% Amounts Owed
  • Amounts Owed: when high percentage of a consumer's credit has been used up, this indicates a consumer may be overextended and more of a credit risk, which affects credit scoring
  • Revolving vs. Installment Debt: too much revolving may mean having trouble making future payments
• 15% Length of Credit Used
  • Length of Credit History: the longer established credit history will raise credit score versus history of a short period.  Long established accounts show longer history of managing credit wisely
  • Age of Credit Accounts: score influenced by age of your oldest account, age of your newest account and average age of all your accounts
• 10% New Credit
  • New Credit: research shows opening several credit accounts in a short time frame does represent greater risk to a lender as
  • Several Credit Inquires: people w/6 inquiries or more can be up to 8Xs more likely to declare bankruptcy than those w/no inquiries
  10%Types of Credit Used
• Types of Credit: score based on mix of credit cards, retail, finance company accounts, mortgage and installment loans

 What Lowers a Score?

• Late Payments
• Maxed out credit cards (low capacity)
• Closing Credit Accounts
• Collection Items
• More Revolving Debt vs. Installment Debt
• Bankruptcy
• New Accounts
• Several Credit Inquiries
• Sub Prime Lenders
• Cosigning

 Note:

• The effect of past credit challenges fades as time passes and recent positive payment history begins to show up on credit history.
• Score is reevaluated: Good credit behavior vs. past credit behavior

 How to Raise or Maintain a Credit Score?

• # 1 - making payments on time
• Removing negative info
• Paying down/off credit cards (raises capacity)
• Using oldest credit card
• Open new accounts slowly
• Correct credit report errors
• Paid collection items
• Mortgage, secured loans and installment loans with positive payment history
• Open Credit Lines vs. Credit Card Limits
• Stable bio

 Remember

• A little work goes a long way!
• Keep a proactive attitude: Don't let unhealthy items go unresolved
• Security
• Confidence for the future

What if my credit is not fixed, do you offer a warranty?

Our service is backed by a warranty which entitles you to 50% of your money back if 50% is not deleted.  I simply don't believe in paying for an ineffective service.