What do they mean?

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Lazer Avtzon FICO Scoring Expert Phone: 917-678-3328 Fax: 718-774-6891 lazera@creditservicez.com www.itseasycreditservices.com. Credit Scores. What do they mean?. What is the Credit Score?. - PowerPoint PPT Presentation

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  • What do they mean? Lazer AvtzonFICO Scoring ExpertPhone: 917-678-3328 Fax: 718-774-6891lazera@creditservicez.comwww.itseasycreditservices.com

  • Predicts the statistical chance of a consumer becoming 90 days late or more on a particular loan obligation

    Each score is specific for each bureau

    Scores range from. 300 to 850 for Classic FICO

    The higher the score the less the odds of default

    The score is generated by analyzing the information contained in the consumers credit report at THAT point in timeWhat is the Credit Score?

  • Consumer Defaults.What are the odds?

  • Score OddsAbove 8001292 to 1760 to 799 597 to 1720 to 759 323 to 1700 to 719 123 to 1680 to 699 55 to 1660 to 679 38 to 1 620 to 659 26 to 1 500 to 600 8 to 1 Below 500 Forget it!Odds on Consumers: 90 days late

  • A low credit score can cost you BIG! Compare 30 yr fixed rates on a $500,000 homeFICO ScoreAPR Rate Monthly PaymentInterest Paid720-8505.3%2776.52$499,549700-7195.9%2965.68$567,647680-6996.5%3160.34$637,722620-6797.6%3530.37$770,937560-6198.4%3809.19$871,305500-5999.9%4350.95$1,066,352

  • What are the determining factors?

  • Credit Score Components1. Past Delinquencies

    2. Debt Ratio

    3. Average Age of File

    4. Mix of Credit

    5. Inquiries

  • 1. Past Delinquencies35% of Credit Score

  • Timing of the delinquency

    Level of delinquency

    Last activity date

    Past Due Notices destroy scores

    Missed payments (low vs. high)

    Pay-off collections in Escrow NOT before1. Past Delinquencies: 35% of Credit Score

  • 2. Revolving Debt Ratio30% of Credit Score

  • Credit Cards: Do NOT share debt among many cards Use each every 6 months Do not lose credit cards Pay-off before closing date Get added as an authorized user

    Credit Limit: Ask for credit limit increases Maintain balances below 10% Make sure the limit is reported2. Revolving Debt Ratio: 30% of Credit Score

  • Spouse: Keep credit separate from spouse Transfer debt to one spouse

    Business: Utilize Business Credit Reports do not distinguish personal from business2. Revolving Debt Ratio: 30% of Credit Score

  • 3. Average Age of Credit File15% of Credit Score

  • One 20 year old credit card will give you an average age of 20 years.

    Adding a 2nd card to your 20 year average will cut the average age of your file down to 10 years (in half)

    This process is reversible if necessary3. Average Age of Credit File: 15% of Credit Score

  • 4. Mix of Credit10% of Credit Score

  • A mixture is best

    A mortgage account

    Equity line of credit

    Auto loan

    3 to 5 revolving credit cards

    4. Mix of Credit: 10% of the score

  • 10% of Credit Score5. Inquiries

  • Inquiries affect the score for 1 year

    Inquiries can cost 0 50 points

    Score is only reduced for the 1st 10 inquiries

    Auto and mortgage inquiries Have a 30 day buffer period Within a 45 day period are treated as one

    Many inquiries do not count Personal Promotional or Job related Insurance and account reviews5. Inquiries: 10% of the score

  • Now you Know! Lazer AvtzonFICO Scoring ExpertPhone: 917-678-3328 Fax: 718-774-6891lazera@creditservicez.comwww.itseasycreditservices.com