Fico road map

willisaddo · Posted: Fri Apr 27, 2007 6:59 am Post subject: Fico road map

FICO SCORES

Understanding the crossroads that lead to explaining the score.

Approximate Credit Weight for each year

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?

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]

miller_st · Joined: 17 Jan 2007 Posts: 917 168.82 Dollars($)

Good information Will Smile

colin · Posted: Fri Apr 27, 2007 1:27 pm Post subject:

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

Caron

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.