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Credit Score FAQ

July 31, 2018 by  
Filed under Blogs, Credit Repair, Credit Score

faq

Credit Scores don’t have to be complicated. Here is a quick FAQ of some of the common questions consumers have about their credit scores.

What is a Credit Score?
A credit score is a 3 digit number which typically ranges from 300-850 but, can range from 250-900 or 501-990 depending on the scoring model, which is used by lenders to determine your creditworthiness for home loans, auto loans, student loans, personal loans, business loans, credit cards, and even insurance premiums. Credit Scores are aggregated from the information contained within your credit reports which are maintained by Experian, Equifax and TransUnion.

What is a FICO Score?
A FICO Score is the most popular credit scoring model used today. 90% of lending decisions are based on FICO scores. There are different FICO scoring models used by the mortgage industry, auto lending industry, insurance industry, credit card industry, etc…. There are actually 49 different FICO scores with different scoring models and variances.

Do I have more than one Credit Score?
Yes. There are dozens of different credit scores like the VantageScore v3.0, v2.0, Plus Score, TransRisk Score, Power Score, and many more including 49 different FICO scores. On top of this, your scores are calculated based on the information contained within your credit reports, of which you have 3 (Experian, Equifax, and TransUnion). So your Experian VantageScore will be different form your TransUnion VantageScore which will be different from your Equifax VantageScore.

Different Credit Scores

How are my Credit Scores calculated?

Your credit scores are calculated from the information contained in your credit reports. There are 5 main factors considered in determining your credit score.
35% – Payment History
30% – Credit Utilization
15% – Length of Credit History
10% – Mix of Credit
10% – New Credit/Inquiries

What your credit scores are made of

What is a good Credit Score?

Credit Scores typically range from 300-850 with some models ranging from 250-900 or 501-990 but, those are outliers so, let’s focus on the most common credit scoring range, 300-850.
Higher credit scores demonstrate a higher degree of creditworthiness and less risk to the lender while lower scores demonstrate a smaller degree of creditworthiness and a higher lending risk.

According to Experian, the average credit score in the US is 691 so try to get your scores above that. Here’s a chart of what the Fair Isaac Company (FICO) deems to be a good credit score.
[poor-exceptional fico score chart]

Does income factor into Credit Scores?

No. There are a myriad of factors which are used to calculate your credit score but, your income is not one of them. You can have a great credit score no matter how much your income is. Other factors that do not impact your credit scores are your age, gender, race, education, employment, address, or marital status.

What do I have to do to get a high Credit Score?

Here’s a quick list of actions that you can take to improve your credit scores.
Pay your bills on time
Maintain a low credit utilization
Limit your credit applications to 1 every 1 months
Don’t close your oldest accounts
Keep a good mix of credit

Follow these 10 Credit Commandments to increase your credit scores.

Where can I get my Credit Scores?

You can access your credit scores for free via sites like CreditKarma or CreditSesame but, keep in mind that these scores will be VantageScore v3.0. You can also get an Experian FICO score from sites like Discover but, it will be just one of the 49 FICO scoring models. The best place to get your FICO credit scores is at myFICO.com where you can access 28 different FICO scores.

 

Why Choose CreditFirm.net?

Assurance. Our Credit Repair process was developed by experienced attorneys.

Speed. Documents are typically processed and sent out for investigation within 3-5 days.

Support. Award winning customer service guarantees your satisfaction.

CreditFirm.net Review

How your FICO Credit Scores are Calculated

May 21, 2018 by  
Filed under Blogs, Credit Score

Credit Score FICO

There are three major credit reporting agencies in the U.S. – Experian, Equifax, and TransUnion. These credit reporting agencies, sometimes referred to as credit bureaus, maintain records of your credit data as well as other personal information such as your name, aliases, addresses (both current and previous), phone numbers, employers, date of birth, social security number, etc…. This collective data gathered on you is referred to as your credit report. Each credit bureau maintains their own credit report which means that you have a separate credit report with Experian, Equifax, and TransUnion.

When you apply for a loan, open a new account, make a payment, miss a payment, etc…, that information is reported from your credit lender to the credit reporting agencies. Due to the fact that credit reporting is 100% voluntary, some lenders may only end up reporting the data to one or two of the three bureaus or reporting the data at different times/dates which may cause you to have differing information on your credit reports and in-turn cause variations in your credit scores.

Here’s more detail on why your credit scores differ.

Now, let’s take a look at the basic information reporting in your credit reports.

A. Personal Information
Credit reports display the personal information such as your name, aliases, address (both current and previous), social security number, date of birth, employer (both current and previous), phone numbers, etc…. It is important to note that personal information does not impact your FICO scores.

B. Account Information
Credit reports display your credit accounts (both active and closed). Each account is reported as a trade-line which contains approximately 40 data points of information such as the date the account was opened, date closed, balance, credit limit/high credit, status, payment history, ECOA code, comments/remarks, address identification code, etc…

C. Inquiry Information
Credit reports also display requests for your credit file from the past 2 years, also known as inquiries. There are 2 different types of inquiries, hard inquiries which impact your credit scores and are applications for credit initiated to obtain credit Soft inquiries do not impact your credit scores, they are “account review” inquiries initiated either by yourself when checking your own credit or by creditors to may wish to send you a pre-approved offer of some sort. Soft inquiries DO NOT impact your FICO scores.

D. Derogatory Information
Your credit report also displays any past delinquencies reported by your creditors or third party data furnishers such as collection agencies. This information includes late payments, past due balances, collections, charge-offs, repossessions, as well as public record information such as judgments, tax liens, and bankruptcy.

How to read a credit report

This data is then plugged into one of the FICO scoring algorithms which then calculates a score to determine your creditworthiness.

NOTE: The FICO score’s original goal was to determine a consumer’s likelihood of becoming 90 days or more past due on a loan within the next 2 years. This is why the payment history and account activity from the last 2 years has the most impact on your credit score.

As the information and data in your credit report change so do your FICO credit scores.

FICO scores are calculated on request and considering that data on your credit reports is constantly changing, your FICO credit score will reflect those changes.

More Information
What are FICO Scores?
5 Components of your FICO credit scores
Why are your credit scores different
Why your FICO credit scores matter

 

Why Choose CreditFirm.net?

Assurance. Our Credit Repair process was developed by experienced attorneys.

Speed. Documents are typically processed and sent out for investigation within 3-5 days.

Support. Award winning customer service guarantees your satisfaction.

CreditFirm.net Review

What are FICO Scores?

May 19, 2018 by  
Filed under Blogs, Credit Score

Credit Score FICO

If you’ve ever applied for any type of credit ranging from credit cards to mortgages or auto loans you have probably heard the term FICO score. That’s because there’s a 90% chance that your lender used the FICO credit scoring model to determine your creditworthiness and ability to repay the debt. In short, a FICO score is the preferred credit scoring model for the majority of the lending industry.

According to a recent CEB TowerGroup analyst report, FICO Scores are used in over 90% of U.S. lending decisions. That means that your FICO score determines not only whether you will be approved for a loan but, also the interest rate that you will be charged among other loan terms like the amount of down payment which you will need in order to be approved.

FICO, short for the Fair Isaac Company, developed the credit scoring model back in the 80’s to help lenders gauge a consumers likelihood of becoming 90 days or more past due on a loan within the next 2 years. Ever since, lenders have been using the FICO score to objectively and consistently determine the risk of lending to a borrower.

The FICO score, there are actually 49 different FICO scores, is a 3 digit number that typically ranges from 300-850 though, some industry-specific FICO scores can range from 250-900. A higher FICO score represents a lower credit risk and a lower FICO score represents a higher credit risk to the lender.

Good Bad Credit Score Chart

The FICO scores themselves are based on the data collected from your credit reports managed by the three major credit reporting agencies (Experian, Equifax, and TransUnion). This data is then quantified in a mathematical algorithm to determine a credit score.

Every lender has their own standards for determining what constitutes a good credit score and the terms/interest rates that they will make available to a consumer at a certain FICO credit score but, the average FICO score in the U.S. is 695 and in order to qualify for the best programs with the best terms you should set your goal for at least a 740 FICO score.
Every industry also has their own FICO scoring model setup to determine what they deem to be a creditworthy borrower. Auto lenders care more about your previous auto lending history and mortgage lenders care more about your previous home loans, so, FICO created scores for those industries which weigh certain accounts differently. Auto lenders use FICO Auto Scores while most credit card companies use FICO Bankcard Scores.

Different Credit Scores

More Information
How your FICO credit scores are calculated
5 Components of your FICO credit scores
Why are your credit scores different
Why your FICO credit scores matter

 

Why Choose CreditFirm.net?

Assurance. Our Credit Repair process was developed by experienced attorneys.

Speed. Documents are typically processed and sent out for investigation within 3-5 days.

Support. Award winning customer service guarantees your satisfaction.

CreditFirm.net Review