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Credit Score Rating Factors

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Information about Credit Score Rating Factors
Finance

Published on February 1, 2009

Author: badcreditchannel

Source: slideshare.net

Description

The Anatomy of a Credit Score . Learn how credit scores are determined and how each individual factor will impact your credit score.
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The Anatomy of a Credit Score How Credit Scores are Determined BadCreditChannel.com

Understanding Credit Scoring CREDIT REPORT FACTORS A. Credit History B. Delinquent Accounts C. Credit Card Accounts D. Public records, foreclosures, & Collection E. Inquiries

CREDIT REPORT FACTORS

A. Credit History

B. Delinquent Accounts

C. Credit Card Accounts

D. Public records, foreclosures, & Collection

E. Inquiries

Understanding Credit Scoring Credit History shows how well debt has been paid over time Older account has greatest impact New accounts aren’t higher risk so long as paid on time Can substitute non-traditional credit

Credit History shows how well debt has been paid over time

Older account has greatest impact

New accounts aren’t higher risk so long as paid on time

Can substitute non-traditional credit

Factors Into Credit Score Major derogatory items Time at present job Occupation Time at present address Ratio of balances to available credit lines Number of credit lines on report Number of years one had credit in the credit bureau database

Major derogatory items

Time at present job

Occupation

Time at present address

Ratio of balances to available credit lines

Number of credit lines on report

Number of years one had credit in the credit bureau database

Years at Current Address Years at Current Address The longer you stay in one place better you will score Points Added/Subtracted <.5 year 12 .5 – 2.49 Yrs 10 2.5 – 6.49 Yrs 15 6.5 – 10.49 Yrs 19 >10.49 Yrs 23 No Info 13

Years at Current Address

The longer you stay in one place better you will score

Points Added/Subtracted

<.5 year 12

.5 – 2.49 Yrs 10

2.5 – 6.49 Yrs 15

6.5 – 10.49 Yrs 19

>10.49 Yrs 23

No Info 13

Do you Rent or Own? Own or Rent? Homeowners will score more points. Points Added/Subtracted Own 25 Rent 15 Other 10 No Info 7

Own or Rent?

Homeowners will score more points.

Points Added/Subtracted

Own 25

Rent 15

Other 10

No Info 7

Existing Credit Cards Existing credit cards and store cards. Consumers who have both credit cards and store cards will score higher. Points Added/Subtracted to Credit Score None 0 Department 11 Major CC 16 Both 27 No Info 10

Existing credit cards and store cards.

Consumers who have both credit cards and store cards will score higher.

Points Added/Subtracted to Credit Score

None 0

Department 11

Major CC 16

Both 27

No Info 10

Have a Bank Account? Bank Reference Consumers who have both a checking and savings account will score higher than those with only one type of account or none at all. Note: If you have been denied a bank account due to bad credit you can open a guaranteed checking account . Points Added/Subtracted to Credit Score Checking 5 Savings 10 Both 20 Other 11 No Info 9

Bank Reference

Consumers who have both a checking and savings account will score higher than those with only one type of account or none at all.

Note: If you have been denied a bank account due to bad credit you can open a guaranteed checking account .

Points Added/Subtracted to Credit Score

Checking 5

Savings 10

Both 20

Other 11

No Info 9

Debt Ratios Debt Ratios The lower the debt ratio, the higher the score. Points Added/Subtracted to Credit Score <15% 22 15-25% 15 26-35% 12 26-49% 5 >50% 0 No Info 13

Debt Ratios

The lower the debt ratio, the higher the score.

Points Added/Subtracted to Credit Score

<15% 22

15-25% 15

26-35% 12

26-49% 5

>50% 0

No Info 13

Number of Inquiries Number of Inquiries Consumers will be penalized for having more than 3 inquiries. Points Added/Subtracted to Credit Score 0 3 1 11 2 3 3-4 -7 5-9 -20 No Record 0

Number of Inquiries

Consumers will be penalized for having more than 3 inquiries.

Points Added/Subtracted to Credit Score

0 3

1 11

2 3

3-4 -7

5-9 -20

No Record 0

Age of Credit File Years in File Consumers with older consumer credit files score higher. Points Added/Subtracted to Credit Score < 1 Year 0 1-2 Years 5 3-4 Years 15 5-7 Years 30 >8 Years 40

Years in File

Consumers with older consumer credit files score higher.

Points Added/Subtracted to Credit Score

< 1 Year 0

1-2 Years 5

3-4 Years 15

5-7 Years 30

>8 Years 40

# of Revolving Lines Number of Revolving Lines Consumers with 1-2 revolving lines score higher than those without any, or with more than 3 Points Added/Subtracted to Credit Score 0 5 1-2 12 3-5 8 >6 4

Number of Revolving Lines

Consumers with 1-2 revolving lines score higher than those without any, or with more than 3

Points Added/Subtracted to Credit Score

0 5

1-2 12

3-5 8

>6 4

Unused Balances Percentage of Balances Available Those with an unused balance of 0-15% score highest. Those with high unused balance percentages are penalized. Points Added/Subtracted to Credit Score 0-15% 15 16-30% 5 31-40% -3 41-50% -10 >50% -18

Percentage of Balances Available

Those with an unused balance of 0-15% score highest. Those with high unused balance percentages are penalized.

Points Added/Subtracted to Credit Score

0-15% 15

16-30% 5

31-40% -3

41-50% -10

>50% -18

Derogatory Credit Derogatory Credit Derogatory credit will significantly lower a consumer’s credit score. Points Added/Subtracted to Credit Score No Record 0 Any Record -29 Slow payment -14 One Satisfa. 17 Two Satisfa. 24 Three Satisfa. 29

Derogatory Credit

Derogatory credit will significantly lower a consumer’s credit score.

Points Added/Subtracted to Credit Score

No Record 0

Any Record -29

Slow payment -14

One Satisfa. 17

Two Satisfa. 24

Three Satisfa. 29

Factors that cannot Influence Credit Scores Age Gender National Origin Sources of Income Race Religion Marital Status Income Level

Age

Gender

National Origin

Sources of Income

Race

Religion

Marital Status

Income Level

Secrets to Getting a High Credit Score Don’t move too often, buy a house and stay there =) Avoid derogatory credit at all costs Maintain a unused balance between 0-15% and do not go above 30% Maintain 1-2 lines of revolving credit Open and keep a credit card and department store card Open and keep a checking account AND a savings account Keep your debt ratio below 15%

Don’t move too often, buy a house and stay there =)

Avoid derogatory credit at all costs

Maintain a unused balance between 0-15% and do not go above 30%

Maintain 1-2 lines of revolving credit

Open and keep a credit card and department store card

Open and keep a checking account AND a savings account

Keep your debt ratio below 15%

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