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 willisaddo
Joined: 10 Oct 2006
Posts: 32
Location: Atlanta
17.53 Dollars($)
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 Posted: Fri Apr 27, 2007 6:59 am Post subject: Fico road map |
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FICO SCORES
Understanding the crossroads that lead to explaining the score.
Approximate Credit Weight for each year- 40% = current to 12 months
- 30% = 13-24 months
- 20% = 25-36 months
- 10% = 37+ months
What makes up the score?- 35% = based on payment history (i.e. on-time pays or delinquencies)
- More weight on current pay history
- 30% = capacity (capacity is King)
- 15% = length of credit
- 10% = accumulation of debt in the last 12-18 months
- # of inquiries
- opening dates
- 10% = mix of credit
- installment (raises) vs. revolving (lowers)
- # of finance company loans the more, the lower the score
What doesn't affect the score?- Debt ratio
- Income
- Length of residence
- Length of employment
How to improve the score?
- 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
- Moving revolving debt to installment debt.
What actions will hurt the score?- Missing payments (irregardless of $ amounts…It will take
24mo to restore credit with one late pay)
- Credit cards at capacity (i.e. maxing out credit cards)
- Closing credit cards out (this lowers available capacity)
- 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.
Source: http://www.cwcu.org/library/credit_scores.htm
[Edited As per Forum Rules - By Caron]
_________________
Will Addo
Wells Fargo Home Mortgage
678-473-6776-O
www.wfhm.com/wfhm/willis-addo Website
“Your credit score: Those three little numbers
can have a six-digit impact on your life.” |
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miller_st
Joined: 17 Jan 2007
Posts: 917
168.92 Dollars($)
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| Posted: Fri Apr 27, 2007 12:47 pm Post subject: |
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Good information Will  |
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colin
Moderator
Joined: 30 Jun 2006
Posts: 602
Location: Waltham, Massachusetts
112.65 Dollars($)
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| Posted: Fri Apr 27, 2007 1:27 pm Post subject: |
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That will help people trying to know more about credit scores but Will if you format it a bit then it would look better.
Colin |
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Caron
Moderator
Joined: 19 Jul 2005
Posts: 1562
Location: florida
266.58 Dollars($)
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| Posted: Sat Apr 28, 2007 1:59 am Post subject: RE: What affects FICO score and how to improve it |
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Yes Will, I agree with the points you have mentioned here about credit score. But I would surely like to add the following tips.
- One should not have several installment loans as they are bound to reduce the score. Instead, one can have a combination of installment loans and credit cards requiring payments at fixed rates.
- It is better to avoid opening too many new accounts for someone who has already been through credit problems in the past.
- One should avoid too many credit inquiries carried out within a short range of time. This would imply that you aren't opening multiple accounts and will not affect the score.
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