The truth about credit scores

THE TRUTH ABOUT CREDIT SCORES


Many people reading this article think you have a pretty good idea of how credit scores work. But do you really? You would be surprised to learn that much of what you think helps or hurts your credit score will actually do the contrary or have no effect at all. There are so many rumors, lies, exaggerations and urban myths, when it comes to how exactly credit scores are calculated. You will be shocked to know that only 35% of your credit score is affected by your payment history. So what about the other 65%? What else besides payment history is affecting my credit score?

Given the fact that credit plays a huge roll in our lives as American consumers, don’t you think that credit education would be a primary concern for our youths? But you don’t learn this stuff in schools. You don’t learn this stuff when you open a credit card.

According to Nellie Mae survey, “21% of undergraduates with credit cards carry balances between $3000 and $7000.”
Credit card solicitors pay colleges "admission fees" to come onto campus, set up tables, and sell credit cards to students.


WHAT ITEMS ARE IN YOUR CREDIT REPORT?



•Identifying Information (name, address, date of birth, employment information. Updates to this information come from information you supply to lenders)
•Trade Lines (All of your credit cards and other accounts; date that you opened the accounts, your credit limit, high balance, current balance payment history etc)
•Credit Inquiries (Voluntary and involuntary inquires such as: Account Review Inquiries, Hard Inquiries, Promotional Inquiries)
•Public Records and Collections (Collections, BKs, Foreclosures, Suits, Wage Garnishments, Liens and Judgments)
ITEMS THAT ARE NOT INCLUDED IN YOUR CREDIT SCORE

Although this information may be reflected elsewhere on your credit report, it is not taken into consideration for your credit score.

•Your Age
•Race, Color, Religion, Nationality, Sex or Marital Status
•Occupation, Salary, Employer, Length of Time of Employment
•Location of Residence
•Interest rates charged to you on credit cards or other account
•Any item reported as Child Support or Rental History
•Certain Types of Inquiries (consumer initiated inquires or promotional inquiries)
WHAT GOES INTO CALCULATING MY CREDIT SCORE???

· What goes into your credit score can be grouped into 5 general categories
· The impact of each factor can verify due to different credit scenarios

PAYMENT HISTORY (35% of your score)

· Payments made on time (Car loans, Mtgs, retail accounts, installment loans, credit cards etc.)
· Public Records (BKs, Judgments, Tax Liens, Suits, Wage Adjustments)
· Severity of Delinquency (length of time past due)
· Amount past due on accounts or collections
· Time sense delinquency or attachment of public record or collection
· Number of past due or derogatory accounts
· Account paid as agreed