WHAT IS A CREDIT REPORT?
Your credit report records payment histories and the amount of time accounts are open, requests for credit, results of legal proceedings and personal data.
WHO KEEPS TRACK OF MY CREDIT REPORT?
The three major credit reporting agencies use the following scoring models:
* Experian: FICO (Fair, Issac and Company)
* Equifax: Beacon
* Trans Union: Empirica
WHAT IS A CREDIT SCORE?
Your credit score is a three-digit number and typically ranges from 350 to 850.
HOW IS MY CREDIT SCORE DETERMINED?
The score estimates a consumer’s willingness and ability to repay a debt based on previous behavior. The less risk the creditor assumes, the better your rate and term options are.
35% of your score is determined by your payment history including the number of accounts paid, number of delinquent accounts and severity of delinquency, previous bankruptcies, judgments, and liens.
30% of your score is determined by the amounts you owe and how much of your credit line is in use, amounts you owe on installment accounts as compared to the original balances, and number of zero balance accounts.
15% of your score is determined by the length of time your credit history , total time of credit history as tracked by the credit bureaus, and the length of time since the accounts were opened.
10% of your score is determined by new credit and the number of recent new accounts, the proportion of new accounts to existing accounts, and the number of recent inquiries.
10% of your score is determined by other variables.
HOW DOES MY SCORE AFFECT MY INTEREST RATE?
Creditors typically assign grades to scores and use these grades to determine interest rate and loan features.
* “A” paper grade allows borrowers the most competitive interest rates and the most creative and flexible loan terms.
* “B” paper grade allows borrowers to obtain good interest rates as well as some creative financing.
* “C” paper grade allows borrowers to obtain higher interest rates and less creative financing.
* “D” paper grade allows borrowers to obtain the highest interest rates and the least creative financing.
OTHER FACTORS THAT AFFECT RATE?
* Length of time at your current residence.
* Length of time at your job and/or chosen field.
* The amount of debt you have as compared to the amount of household income.
MANAGING YOUR CREDIT REPORT?
Obtain a copy of your credit report and review it at least once every 12 months. Contact one or more of the agencies listed below to request a copy of your report.
* Equifax 1-800-685-1111 www.equifax.com
* Trans Union 1-800-888-4213 www.transunion.com
* Experian 1-888-397-3742 www.experian.com