The biggest shift in three decades is coming to how FICO credit scores are calculated next year.
Showing posts with label credit score. Show all posts
Showing posts with label credit score. Show all posts
Tuesday, October 23, 2018
UltraFICO Credit Scores Are Launching in 2019
Wednesday, October 10, 2018
Need to boost your credit score for a better mortgage rate? Here's how one woman did it.
A good credit score can land you your dream home without a nightmare mortgage.
Generally, a higher credit score will earn you a lower interest rate with most lenders.
Tuesday, October 9, 2018
Once you hit this credit score, going higher is a 'waste of time,' expert says
A 56-year-old government employee from Cleveland named Tom Pavelka had the "highest credit score in America" in 2012, the Daily Mail reported at the time. His near-perfect 848 ranked "higher than 100 percent of U.S. consumers," according to a letter he received from a credit bureau.
Tuesday, March 10, 2015
Credit Bureaus to Make It Easier to Fix Errors in Credit Reports
The three major credit bureaus – Equifax, Experian and TransUnion – will be making consumer-friendly changes to how they resolve disputes as well as how they handle the reporting of medical debts. Just don't expect the changes to take effect immediately. The new provisions, the result of a settlement agreement between the bureaus and New York Attorney General Eric Schneiderman, will be phased in nationwide over about three years, according to John Ulzheimer, president of consumer education at credit Web site CreditSesame.com.
Read more... http://m.kiplinger.com/article/credit/T017-C011-S001-credit-bureaus-to-make-it-easier-to-fix-errors-in.html
Sunday, March 31, 2013
Like your credit score? Look closer
PHOENIX -- You can gaze into a mirror to see what you look like to friends, family members, co-workers and acquaintances.
But what image do you project to banks, credit-card companies, insurers and even prospective employers? Your reflection on the piece of glass won't tell.
Read more: Like your credit score? Look closer
Like your credit score? Look closer
PHOENIX -- You can gaze into a mirror to see what you look like to friends, family members, co-workers and acquaintances.
But what image do you project to banks, credit-card companies, insurers and even prospective employers? Your reflection on the piece of glass won't tell.
Read more: Like your credit score? Look closer
Monday, October 22, 2012
Your Money: Cleaning up your credit report
I heard from a mother the other day who wanted to know if there was any way her daughter could get rid of some bad blemishes on her credit report.
Could you ask creditors if they'd remove such items, she wondered?
Read more: Your Money: Cleaning up your credit report
Your Money: Cleaning up your credit report
I heard from a mother the other day who wanted to know if there was any way her daughter could get rid of some bad blemishes on her credit report.
Could you ask creditors if they'd remove such items, she wondered?
Read more: Your Money: Cleaning up your credit report
Sunday, October 16, 2011
Myths, misperceptions about credit scores rampant
Yet 42 percent of those polled in a recent Visa Inc. survey never bother to check their score.
By ignoring this vital measure of credit worthiness, consumers may be missing an opportunity to improve their score. And for many, failure to take any action could cost them thousands in higher interest payments.
One reason for neglecting this issue is that scores usually come with a price tag.
Anyone who wants to check their scores before applying for a loan will have to pay.
FICO Inc., the company that created creditscoring, sells its scores for $19.95 on its website, www.myfico.com . The company also offers periodic score monitoring services starting at $4.95 per month.
The three main reporting companies, Equifax, TransUnion, and Experian, most commonly provide FICO scores to lenders; but FICO scores aren't the only one's out there. The credit agencies also calculate their own scores that they sell to consumers
Equifax and TransUnion sell VantageScores, which range from 501 to 990. VantageScores are used by some lenders but have a far smaller piece of the market than FICO scores. Some Equifax products also include FICO scores.
Experian offers both VantageScores and its own calculation, called a PLUS score, which ranges from 330 to 830. PLUS scores are "educational" scores that are not used by lenders.
Lenders are now required to provide the scores they considered to applicants who are denied credit or given a higher interest rate. But even the FICO scores provided to lenders by the three agencies won't likely be identical, either because the details on credit reports can vary or because they use different formulas created by FICO.
Watch out for promises of free credit scores. These offers usually require you to sign up for a score monitoring service that charges a monthly fee. The website CreditKarma.com is genuinely free, but offers only an approximation of a score, not an actual score that is used by a lender.
It helps to know what information is used to develop a credit score. A FICO score is calculated from the following data:
- 35 percent: An individual's payment history, whether or not payments are made on time.
- 30 percent: Amounts owed and how much available credit is being used.
- 15 percent: Length of credit history, or how long each account has been open.
- 10 percent: An individual's use of new credit or recent applications that resulted in a credit score check.
- 10 percent: What types of credit the individual is using - mortgages, car loans, personal loans, credit cards, etc.
The Visa survey, however, found that many consumers are misinformed about the type of data used to calculate scores.
The main points are well known. The survey found 78 percent of the respondents knew that bill payment history is factored in, and 71 percent were aware that current debt levels have an impact.
But just 13 percent knew that bankruptcy would be considered as part of payment history. And an alarming number of those polled also had wrong ideas about other types of information being included in the equation.
For instance, 64 percent believe that income is a factor, and 60 percent think employment history counts. Nearly 59 percent said they thought the interest rates on current debt matters for scores, and 53 percent think assets or savings is weighed.
A substantial number also mistakenly believe that demographics play a role. Among the mistaken beliefs are that traits like gender, race, national origin or the ability to speak English are factored in - with the number one misconception being the 39 percent that thought age is included.
In fact, FICO points out on its website that it's illegal to consider age, race, religion, national origin, gender and marital status in credit scoring. The company says it only considers the payment and account information found in a credit report.
If you find you have a low score, but you know your payment history and other factors are good, it may indicate there's incorrect information on your credit report.
That means a head-in-the-sand approach to the numbers could result in missing out on early detection of issues like identity theft. It may even put getting a new job in jeopardy.
Employers cannot access credit scores, but a poll last year by the Society for Human Resource Management found that 47 percent of all employers check credit reports for at least some job applicants, usually those who will have some financial duties. The group found 13 percent check all applicants. Several states prohibit checking credit history as a condition for most hiring, including California, where Gov. Jerry Brown signed a law on Monday limiting credit report checks for employment purposes starting Jan. 1.
Everyone is entitled to one free credit report from each of the three credit agencies every year. Reports can be requested at www.annualcreditreport.com .
by Eileen AJ Connelly Associated Press Oct. 12, 2011 01:59 PM
Myths, misperceptions about credit scores rampant
Myths, misperceptions about credit scores rampant
Yet 42 percent of those polled in a recent Visa Inc. survey never bother to check their score.
By ignoring this vital measure of credit worthiness, consumers may be missing an opportunity to improve their score. And for many, failure to take any action could cost them thousands in higher interest payments.
One reason for neglecting this issue is that scores usually come with a price tag.
Anyone who wants to check their scores before applying for a loan will have to pay.
FICO Inc., the company that created creditscoring, sells its scores for $19.95 on its website, www.myfico.com . The company also offers periodic score monitoring services starting at $4.95 per month.
The three main reporting companies, Equifax, TransUnion, and Experian, most commonly provide FICO scores to lenders; but FICO scores aren't the only one's out there. The credit agencies also calculate their own scores that they sell to consumers
Equifax and TransUnion sell VantageScores, which range from 501 to 990. VantageScores are used by some lenders but have a far smaller piece of the market than FICO scores. Some Equifax products also include FICO scores.
Experian offers both VantageScores and its own calculation, called a PLUS score, which ranges from 330 to 830. PLUS scores are "educational" scores that are not used by lenders.
Lenders are now required to provide the scores they considered to applicants who are denied credit or given a higher interest rate. But even the FICO scores provided to lenders by the three agencies won't likely be identical, either because the details on credit reports can vary or because they use different formulas created by FICO.
Watch out for promises of free credit scores. These offers usually require you to sign up for a score monitoring service that charges a monthly fee. The website CreditKarma.com is genuinely free, but offers only an approximation of a score, not an actual score that is used by a lender.
It helps to know what information is used to develop a credit score. A FICO score is calculated from the following data:
- 35 percent: An individual's payment history, whether or not payments are made on time.
- 30 percent: Amounts owed and how much available credit is being used.
- 15 percent: Length of credit history, or how long each account has been open.
- 10 percent: An individual's use of new credit or recent applications that resulted in a credit score check.
- 10 percent: What types of credit the individual is using - mortgages, car loans, personal loans, credit cards, etc.
The Visa survey, however, found that many consumers are misinformed about the type of data used to calculate scores.
The main points are well known. The survey found 78 percent of the respondents knew that bill payment history is factored in, and 71 percent were aware that current debt levels have an impact.
But just 13 percent knew that bankruptcy would be considered as part of payment history. And an alarming number of those polled also had wrong ideas about other types of information being included in the equation.
For instance, 64 percent believe that income is a factor, and 60 percent think employment history counts. Nearly 59 percent said they thought the interest rates on current debt matters for scores, and 53 percent think assets or savings is weighed.
A substantial number also mistakenly believe that demographics play a role. Among the mistaken beliefs are that traits like gender, race, national origin or the ability to speak English are factored in - with the number one misconception being the 39 percent that thought age is included.
In fact, FICO points out on its website that it's illegal to consider age, race, religion, national origin, gender and marital status in credit scoring. The company says it only considers the payment and account information found in a credit report.
If you find you have a low score, but you know your payment history and other factors are good, it may indicate there's incorrect information on your credit report.
That means a head-in-the-sand approach to the numbers could result in missing out on early detection of issues like identity theft. It may even put getting a new job in jeopardy.
Employers cannot access credit scores, but a poll last year by the Society for Human Resource Management found that 47 percent of all employers check credit reports for at least some job applicants, usually those who will have some financial duties. The group found 13 percent check all applicants. Several states prohibit checking credit history as a condition for most hiring, including California, where Gov. Jerry Brown signed a law on Monday limiting credit report checks for employment purposes starting Jan. 1.
Everyone is entitled to one free credit report from each of the three credit agencies every year. Reports can be requested at www.annualcreditreport.com .
by Eileen AJ Connelly Associated Press Oct. 12, 2011 01:59 PM
Myths, misperceptions about credit scores rampant
Myths, misperceptions about credit scores rampant
Yet 42 percent of those polled in a recent Visa Inc. survey never bother to check their score.
By ignoring this vital measure of credit worthiness, consumers may be missing an opportunity to improve their score. And for many, failure to take any action could cost them thousands in higher interest payments.
One reason for neglecting this issue is that scores usually come with a price tag.
Anyone who wants to check their scores before applying for a loan will have to pay.
FICO Inc., the company that created creditscoring, sells its scores for $19.95 on its website, www.myfico.com . The company also offers periodic score monitoring services starting at $4.95 per month.
The three main reporting companies, Equifax, TransUnion, and Experian, most commonly provide FICO scores to lenders; but FICO scores aren't the only one's out there. The credit agencies also calculate their own scores that they sell to consumers
Equifax and TransUnion sell VantageScores, which range from 501 to 990. VantageScores are used by some lenders but have a far smaller piece of the market than FICO scores. Some Equifax products also include FICO scores.
Experian offers both VantageScores and its own calculation, called a PLUS score, which ranges from 330 to 830. PLUS scores are "educational" scores that are not used by lenders.
Lenders are now required to provide the scores they considered to applicants who are denied credit or given a higher interest rate. But even the FICO scores provided to lenders by the three agencies won't likely be identical, either because the details on credit reports can vary or because they use different formulas created by FICO.
Watch out for promises of free credit scores. These offers usually require you to sign up for a score monitoring service that charges a monthly fee. The website CreditKarma.com is genuinely free, but offers only an approximation of a score, not an actual score that is used by a lender.
It helps to know what information is used to develop a credit score. A FICO score is calculated from the following data:
- 35 percent: An individual's payment history, whether or not payments are made on time.
- 30 percent: Amounts owed and how much available credit is being used.
- 15 percent: Length of credit history, or how long each account has been open.
- 10 percent: An individual's use of new credit or recent applications that resulted in a credit score check.
- 10 percent: What types of credit the individual is using - mortgages, car loans, personal loans, credit cards, etc.
The Visa survey, however, found that many consumers are misinformed about the type of data used to calculate scores.
The main points are well known. The survey found 78 percent of the respondents knew that bill payment history is factored in, and 71 percent were aware that current debt levels have an impact.
But just 13 percent knew that bankruptcy would be considered as part of payment history. And an alarming number of those polled also had wrong ideas about other types of information being included in the equation.
For instance, 64 percent believe that income is a factor, and 60 percent think employment history counts. Nearly 59 percent said they thought the interest rates on current debt matters for scores, and 53 percent think assets or savings is weighed.
A substantial number also mistakenly believe that demographics play a role. Among the mistaken beliefs are that traits like gender, race, national origin or the ability to speak English are factored in - with the number one misconception being the 39 percent that thought age is included.
In fact, FICO points out on its website that it's illegal to consider age, race, religion, national origin, gender and marital status in credit scoring. The company says it only considers the payment and account information found in a credit report.
If you find you have a low score, but you know your payment history and other factors are good, it may indicate there's incorrect information on your credit report.
That means a head-in-the-sand approach to the numbers could result in missing out on early detection of issues like identity theft. It may even put getting a new job in jeopardy.
Employers cannot access credit scores, but a poll last year by the Society for Human Resource Management found that 47 percent of all employers check credit reports for at least some job applicants, usually those who will have some financial duties. The group found 13 percent check all applicants. Several states prohibit checking credit history as a condition for most hiring, including California, where Gov. Jerry Brown signed a law on Monday limiting credit report checks for employment purposes starting Jan. 1.
Everyone is entitled to one free credit report from each of the three credit agencies every year. Reports can be requested at www.annualcreditreport.com .
by Eileen AJ Connelly Associated Press Oct. 12, 2011 01:59 PM
Myths, misperceptions about credit scores rampant
Myths, misperceptions about credit scores rampant
Yet 42 percent of those polled in a recent Visa Inc. survey never bother to check their score.
By ignoring this vital measure of credit worthiness, consumers may be missing an opportunity to improve their score. And for many, failure to take any action could cost them thousands in higher interest payments.
One reason for neglecting this issue is that scores usually come with a price tag.
Anyone who wants to check their scores before applying for a loan will have to pay.
FICO Inc., the company that created creditscoring, sells its scores for $19.95 on its website, www.myfico.com . The company also offers periodic score monitoring services starting at $4.95 per month.
The three main reporting companies, Equifax, TransUnion, and Experian, most commonly provide FICO scores to lenders; but FICO scores aren't the only one's out there. The credit agencies also calculate their own scores that they sell to consumers
Equifax and TransUnion sell VantageScores, which range from 501 to 990. VantageScores are used by some lenders but have a far smaller piece of the market than FICO scores. Some Equifax products also include FICO scores.
Experian offers both VantageScores and its own calculation, called a PLUS score, which ranges from 330 to 830. PLUS scores are "educational" scores that are not used by lenders.
Lenders are now required to provide the scores they considered to applicants who are denied credit or given a higher interest rate. But even the FICO scores provided to lenders by the three agencies won't likely be identical, either because the details on credit reports can vary or because they use different formulas created by FICO.
Watch out for promises of free credit scores. These offers usually require you to sign up for a score monitoring service that charges a monthly fee. The website CreditKarma.com is genuinely free, but offers only an approximation of a score, not an actual score that is used by a lender.
It helps to know what information is used to develop a credit score. A FICO score is calculated from the following data:
- 35 percent: An individual's payment history, whether or not payments are made on time.
- 30 percent: Amounts owed and how much available credit is being used.
- 15 percent: Length of credit history, or how long each account has been open.
- 10 percent: An individual's use of new credit or recent applications that resulted in a credit score check.
- 10 percent: What types of credit the individual is using - mortgages, car loans, personal loans, credit cards, etc.
The Visa survey, however, found that many consumers are misinformed about the type of data used to calculate scores.
The main points are well known. The survey found 78 percent of the respondents knew that bill payment history is factored in, and 71 percent were aware that current debt levels have an impact.
But just 13 percent knew that bankruptcy would be considered as part of payment history. And an alarming number of those polled also had wrong ideas about other types of information being included in the equation.
For instance, 64 percent believe that income is a factor, and 60 percent think employment history counts. Nearly 59 percent said they thought the interest rates on current debt matters for scores, and 53 percent think assets or savings is weighed.
A substantial number also mistakenly believe that demographics play a role. Among the mistaken beliefs are that traits like gender, race, national origin or the ability to speak English are factored in - with the number one misconception being the 39 percent that thought age is included.
In fact, FICO points out on its website that it's illegal to consider age, race, religion, national origin, gender and marital status in credit scoring. The company says it only considers the payment and account information found in a credit report.
If you find you have a low score, but you know your payment history and other factors are good, it may indicate there's incorrect information on your credit report.
That means a head-in-the-sand approach to the numbers could result in missing out on early detection of issues like identity theft. It may even put getting a new job in jeopardy.
Employers cannot access credit scores, but a poll last year by the Society for Human Resource Management found that 47 percent of all employers check credit reports for at least some job applicants, usually those who will have some financial duties. The group found 13 percent check all applicants. Several states prohibit checking credit history as a condition for most hiring, including California, where Gov. Jerry Brown signed a law on Monday limiting credit report checks for employment purposes starting Jan. 1.
Everyone is entitled to one free credit report from each of the three credit agencies every year. Reports can be requested at www.annualcreditreport.com .
by Eileen AJ Connelly Associated Press Oct. 12, 2011 01:59 PM
Myths, misperceptions about credit scores rampant
Myths, misperceptions about credit scores rampant
Yet 42 percent of those polled in a recent Visa Inc. survey never bother to check their score.
By ignoring this vital measure of credit worthiness, consumers may be missing an opportunity to improve their score. And for many, failure to take any action could cost them thousands in higher interest payments.
One reason for neglecting this issue is that scores usually come with a price tag.
Anyone who wants to check their scores before applying for a loan will have to pay.
FICO Inc., the company that created creditscoring, sells its scores for $19.95 on its website, www.myfico.com . The company also offers periodic score monitoring services starting at $4.95 per month.
The three main reporting companies, Equifax, TransUnion, and Experian, most commonly provide FICO scores to lenders; but FICO scores aren't the only one's out there. The credit agencies also calculate their own scores that they sell to consumers
Equifax and TransUnion sell VantageScores, which range from 501 to 990. VantageScores are used by some lenders but have a far smaller piece of the market than FICO scores. Some Equifax products also include FICO scores.
Experian offers both VantageScores and its own calculation, called a PLUS score, which ranges from 330 to 830. PLUS scores are "educational" scores that are not used by lenders.
Lenders are now required to provide the scores they considered to applicants who are denied credit or given a higher interest rate. But even the FICO scores provided to lenders by the three agencies won't likely be identical, either because the details on credit reports can vary or because they use different formulas created by FICO.
Watch out for promises of free credit scores. These offers usually require you to sign up for a score monitoring service that charges a monthly fee. The website CreditKarma.com is genuinely free, but offers only an approximation of a score, not an actual score that is used by a lender.
It helps to know what information is used to develop a credit score. A FICO score is calculated from the following data:
- 35 percent: An individual's payment history, whether or not payments are made on time.
- 30 percent: Amounts owed and how much available credit is being used.
- 15 percent: Length of credit history, or how long each account has been open.
- 10 percent: An individual's use of new credit or recent applications that resulted in a credit score check.
- 10 percent: What types of credit the individual is using - mortgages, car loans, personal loans, credit cards, etc.
The Visa survey, however, found that many consumers are misinformed about the type of data used to calculate scores.
The main points are well known. The survey found 78 percent of the respondents knew that bill payment history is factored in, and 71 percent were aware that current debt levels have an impact.
But just 13 percent knew that bankruptcy would be considered as part of payment history. And an alarming number of those polled also had wrong ideas about other types of information being included in the equation.
For instance, 64 percent believe that income is a factor, and 60 percent think employment history counts. Nearly 59 percent said they thought the interest rates on current debt matters for scores, and 53 percent think assets or savings is weighed.
A substantial number also mistakenly believe that demographics play a role. Among the mistaken beliefs are that traits like gender, race, national origin or the ability to speak English are factored in - with the number one misconception being the 39 percent that thought age is included.
In fact, FICO points out on its website that it's illegal to consider age, race, religion, national origin, gender and marital status in credit scoring. The company says it only considers the payment and account information found in a credit report.
If you find you have a low score, but you know your payment history and other factors are good, it may indicate there's incorrect information on your credit report.
That means a head-in-the-sand approach to the numbers could result in missing out on early detection of issues like identity theft. It may even put getting a new job in jeopardy.
Employers cannot access credit scores, but a poll last year by the Society for Human Resource Management found that 47 percent of all employers check credit reports for at least some job applicants, usually those who will have some financial duties. The group found 13 percent check all applicants. Several states prohibit checking credit history as a condition for most hiring, including California, where Gov. Jerry Brown signed a law on Monday limiting credit report checks for employment purposes starting Jan. 1.
Everyone is entitled to one free credit report from each of the three credit agencies every year. Reports can be requested at www.annualcreditreport.com .
by Eileen AJ Connelly Associated Press Oct. 12, 2011 01:59 PM
Myths, misperceptions about credit scores rampant
Myths, misperceptions about credit scores rampant
Yet 42 percent of those polled in a recent Visa Inc. survey never bother to check their score.
By ignoring this vital measure of credit worthiness, consumers may be missing an opportunity to improve their score. And for many, failure to take any action could cost them thousands in higher interest payments.
One reason for neglecting this issue is that scores usually come with a price tag.
Anyone who wants to check their scores before applying for a loan will have to pay.
FICO Inc., the company that created creditscoring, sells its scores for $19.95 on its website, www.myfico.com . The company also offers periodic score monitoring services starting at $4.95 per month.
The three main reporting companies, Equifax, TransUnion, and Experian, most commonly provide FICO scores to lenders; but FICO scores aren't the only one's out there. The credit agencies also calculate their own scores that they sell to consumers
Equifax and TransUnion sell VantageScores, which range from 501 to 990. VantageScores are used by some lenders but have a far smaller piece of the market than FICO scores. Some Equifax products also include FICO scores.
Experian offers both VantageScores and its own calculation, called a PLUS score, which ranges from 330 to 830. PLUS scores are "educational" scores that are not used by lenders.
Lenders are now required to provide the scores they considered to applicants who are denied credit or given a higher interest rate. But even the FICO scores provided to lenders by the three agencies won't likely be identical, either because the details on credit reports can vary or because they use different formulas created by FICO.
Watch out for promises of free credit scores. These offers usually require you to sign up for a score monitoring service that charges a monthly fee. The website CreditKarma.com is genuinely free, but offers only an approximation of a score, not an actual score that is used by a lender.
It helps to know what information is used to develop a credit score. A FICO score is calculated from the following data:
- 35 percent: An individual's payment history, whether or not payments are made on time.
- 30 percent: Amounts owed and how much available credit is being used.
- 15 percent: Length of credit history, or how long each account has been open.
- 10 percent: An individual's use of new credit or recent applications that resulted in a credit score check.
- 10 percent: What types of credit the individual is using - mortgages, car loans, personal loans, credit cards, etc.
The Visa survey, however, found that many consumers are misinformed about the type of data used to calculate scores.
The main points are well known. The survey found 78 percent of the respondents knew that bill payment history is factored in, and 71 percent were aware that current debt levels have an impact.
But just 13 percent knew that bankruptcy would be considered as part of payment history. And an alarming number of those polled also had wrong ideas about other types of information being included in the equation.
For instance, 64 percent believe that income is a factor, and 60 percent think employment history counts. Nearly 59 percent said they thought the interest rates on current debt matters for scores, and 53 percent think assets or savings is weighed.
A substantial number also mistakenly believe that demographics play a role. Among the mistaken beliefs are that traits like gender, race, national origin or the ability to speak English are factored in - with the number one misconception being the 39 percent that thought age is included.
In fact, FICO points out on its website that it's illegal to consider age, race, religion, national origin, gender and marital status in credit scoring. The company says it only considers the payment and account information found in a credit report.
If you find you have a low score, but you know your payment history and other factors are good, it may indicate there's incorrect information on your credit report.
That means a head-in-the-sand approach to the numbers could result in missing out on early detection of issues like identity theft. It may even put getting a new job in jeopardy.
Employers cannot access credit scores, but a poll last year by the Society for Human Resource Management found that 47 percent of all employers check credit reports for at least some job applicants, usually those who will have some financial duties. The group found 13 percent check all applicants. Several states prohibit checking credit history as a condition for most hiring, including California, where Gov. Jerry Brown signed a law on Monday limiting credit report checks for employment purposes starting Jan. 1.
Everyone is entitled to one free credit report from each of the three credit agencies every year. Reports can be requested at www.annualcreditreport.com .
by Eileen AJ Connelly Associated Press Oct. 12, 2011 01:59 PM
Myths, misperceptions about credit scores rampant
Myths, misperceptions about credit scores rampant
Yet 42 percent of those polled in a recent Visa Inc. survey never bother to check their score.
By ignoring this vital measure of credit worthiness, consumers may be missing an opportunity to improve their score. And for many, failure to take any action could cost them thousands in higher interest payments.
One reason for neglecting this issue is that scores usually come with a price tag.
Anyone who wants to check their scores before applying for a loan will have to pay.
FICO Inc., the company that created creditscoring, sells its scores for $19.95 on its website, www.myfico.com . The company also offers periodic score monitoring services starting at $4.95 per month.
The three main reporting companies, Equifax, TransUnion, and Experian, most commonly provide FICO scores to lenders; but FICO scores aren't the only one's out there. The credit agencies also calculate their own scores that they sell to consumers
Equifax and TransUnion sell VantageScores, which range from 501 to 990. VantageScores are used by some lenders but have a far smaller piece of the market than FICO scores. Some Equifax products also include FICO scores.
Experian offers both VantageScores and its own calculation, called a PLUS score, which ranges from 330 to 830. PLUS scores are "educational" scores that are not used by lenders.
Lenders are now required to provide the scores they considered to applicants who are denied credit or given a higher interest rate. But even the FICO scores provided to lenders by the three agencies won't likely be identical, either because the details on credit reports can vary or because they use different formulas created by FICO.
Watch out for promises of free credit scores. These offers usually require you to sign up for a score monitoring service that charges a monthly fee. The website CreditKarma.com is genuinely free, but offers only an approximation of a score, not an actual score that is used by a lender.
It helps to know what information is used to develop a credit score. A FICO score is calculated from the following data:
- 35 percent: An individual's payment history, whether or not payments are made on time.
- 30 percent: Amounts owed and how much available credit is being used.
- 15 percent: Length of credit history, or how long each account has been open.
- 10 percent: An individual's use of new credit or recent applications that resulted in a credit score check.
- 10 percent: What types of credit the individual is using - mortgages, car loans, personal loans, credit cards, etc.
The Visa survey, however, found that many consumers are misinformed about the type of data used to calculate scores.
The main points are well known. The survey found 78 percent of the respondents knew that bill payment history is factored in, and 71 percent were aware that current debt levels have an impact.
But just 13 percent knew that bankruptcy would be considered as part of payment history. And an alarming number of those polled also had wrong ideas about other types of information being included in the equation.
For instance, 64 percent believe that income is a factor, and 60 percent think employment history counts. Nearly 59 percent said they thought the interest rates on current debt matters for scores, and 53 percent think assets or savings is weighed.
A substantial number also mistakenly believe that demographics play a role. Among the mistaken beliefs are that traits like gender, race, national origin or the ability to speak English are factored in - with the number one misconception being the 39 percent that thought age is included.
In fact, FICO points out on its website that it's illegal to consider age, race, religion, national origin, gender and marital status in credit scoring. The company says it only considers the payment and account information found in a credit report.
If you find you have a low score, but you know your payment history and other factors are good, it may indicate there's incorrect information on your credit report.
That means a head-in-the-sand approach to the numbers could result in missing out on early detection of issues like identity theft. It may even put getting a new job in jeopardy.
Employers cannot access credit scores, but a poll last year by the Society for Human Resource Management found that 47 percent of all employers check credit reports for at least some job applicants, usually those who will have some financial duties. The group found 13 percent check all applicants. Several states prohibit checking credit history as a condition for most hiring, including California, where Gov. Jerry Brown signed a law on Monday limiting credit report checks for employment purposes starting Jan. 1.
Everyone is entitled to one free credit report from each of the three credit agencies every year. Reports can be requested at www.annualcreditreport.com .
by Eileen AJ Connelly Associated Press Oct. 12, 2011 01:59 PM
Myths, misperceptions about credit scores rampant
Tuesday, May 31, 2011
Spring-cleaning-for-your-credit-score-investopedia
It's springtime. The chaos of the holidays is long gone, spring break is over, and summer hasn't arrived yet. Excuses are easy to come by when summer is in full-swing, so why not take advantage of this temporary lull and get your finances in order now? These six tips will help you get your finances organized and get your credit score cleaned up.
Spring-cleaning-for-your-credit-score-investopedia
1. Check Your Credit Report
Any time you're trying to improve your credit score, your first step should be to check your credit report. You can get one free report every 12 months from each of the three credit bureaus (Experian, Equifax and TransUnion) by going to AnnualCreditReport.com. Look closely at each account on your report to make sure that there are no mistakes dragging down your score. Also, make sure that you recognize all of the accounts on your report. Unfamiliar accounts could be a sign of identity theft, though often they are just old accounts that you've forgotten about or accounts for which you are an authorized user but not the primary account holder. Don't panic until you research them further.
2. Assess Your Credit Card Debt
If you don't know the details of your debt, you probably don't have an effective plan for paying it off. Make a list of all the cards that you carry a balance on, how much you owe on each, and what the interest rate is. This way, you'll know which accounts are costing you the most and you can plan to pay them off first.
If you've living off your credit cards because you're unemployed or underemployed, assess your available balances. Also note which cards have lower interest rates and use those for your purchases if possible.
If you added to your debt last Christmas, start thinking now about how you will avoid doing the same thing this year. May isn't too early to plan for the holidays -- you still have time to gradually buy gifts over the course of the year, as you can afford them, or time to save up a holiday fund so you don't have to pay interest on 2011's gifts in 2012 and beyond. A Black Friday deal isn't a deal at 30% APR.
3. Improve Your Interest-Rate Situation
It may not be possible to qualify for a new card with a lower interest rate if you have poor credit, but it might be worth trying. If you do get approved, make sure you understand the balance transfer fees before moving your high-interest debt, and make sure you'll come out ahead even after the fees. Applying for new credit does temporarily ding your credit score, but the savings from lowering your interest rate can be substantial.
You can also try calling your creditors to negotiate a lower interest rate. If that doesn't work, see if you can at least get your card's annual fee waived (if it has one). Develop a strategy before you call because you'll need a way to convince your creditors that there's something in it for them if they give you a break.
4. Prioritize Your High-Interest Debt
Whichever card has the highest interest rate is the one you need to pay off first. Keep paying the minimum on your other cards (and pay on time), and put what you can afford toward your highest-interest balance. The sooner you knock out your high-interest debt, the more money you'll have to work with each month and the easier it will be to work your way through your remaining debts and contribute to your emergency fund.
5. Create a Bill Payment System
Thirty-five percent of your credit score is based on whether you pay your bills on time, so if you want to improve your credit score, getting on top of your due dates is a great place to start. Look at recent bills and add the due dates to your credit card list. Then, use an electronic calendar system like Outlook or an old-fashioned paper calendar to remind yourself of these due dates each and every month. A checking account with online bill pay can also help you get organized by allowing you to see and pay all of your bills in one place. Some online bill payment systems, like Ally Bank's, can be synched up with your other accounts to let you know how much you owe and when it's due.
In addition to hurting your credit score, late payments cost you money. If you avoided just one $30 late fee per month you would save $360 in a year. That's money you could put toward paying down your debt instead of adding to it.
6. Start Budgeting
If you know exactly how much money you have coming in and going out every month, not only are you likely to spend less because you will be holding yourself accountable for your spending, but you'll also know how much you can afford to put toward paying down your credit card debt each month.
The Bottom Line
In the process of improving your credit score, you'll also be improving your overall financial situation. So even if you don't plan to do anything that will require you have an attractive credit score (like open a new credit card account, take out an auto loan or apply for a mortgage), taking these actions will be worthwhile.
by Amy Fontinelle Yahoo Finance May 31, 2011
Spring-cleaning-for-your-credit-score-investopedia
Spring-cleaning-for-your-credit-score-investopedia
It's springtime. The chaos of the holidays is long gone, spring break is over, and summer hasn't arrived yet. Excuses are easy to come by when summer is in full-swing, so why not take advantage of this temporary lull and get your finances in order now? These six tips will help you get your finances organized and get your credit score cleaned up.
Spring-cleaning-for-your-credit-score-investopedia
1. Check Your Credit Report
Any time you're trying to improve your credit score, your first step should be to check your credit report. You can get one free report every 12 months from each of the three credit bureaus (Experian, Equifax and TransUnion) by going to AnnualCreditReport.com. Look closely at each account on your report to make sure that there are no mistakes dragging down your score. Also, make sure that you recognize all of the accounts on your report. Unfamiliar accounts could be a sign of identity theft, though often they are just old accounts that you've forgotten about or accounts for which you are an authorized user but not the primary account holder. Don't panic until you research them further.
2. Assess Your Credit Card Debt
If you don't know the details of your debt, you probably don't have an effective plan for paying it off. Make a list of all the cards that you carry a balance on, how much you owe on each, and what the interest rate is. This way, you'll know which accounts are costing you the most and you can plan to pay them off first.
If you've living off your credit cards because you're unemployed or underemployed, assess your available balances. Also note which cards have lower interest rates and use those for your purchases if possible.
If you added to your debt last Christmas, start thinking now about how you will avoid doing the same thing this year. May isn't too early to plan for the holidays -- you still have time to gradually buy gifts over the course of the year, as you can afford them, or time to save up a holiday fund so you don't have to pay interest on 2011's gifts in 2012 and beyond. A Black Friday deal isn't a deal at 30% APR.
3. Improve Your Interest-Rate Situation
It may not be possible to qualify for a new card with a lower interest rate if you have poor credit, but it might be worth trying. If you do get approved, make sure you understand the balance transfer fees before moving your high-interest debt, and make sure you'll come out ahead even after the fees. Applying for new credit does temporarily ding your credit score, but the savings from lowering your interest rate can be substantial.
You can also try calling your creditors to negotiate a lower interest rate. If that doesn't work, see if you can at least get your card's annual fee waived (if it has one). Develop a strategy before you call because you'll need a way to convince your creditors that there's something in it for them if they give you a break.
4. Prioritize Your High-Interest Debt
Whichever card has the highest interest rate is the one you need to pay off first. Keep paying the minimum on your other cards (and pay on time), and put what you can afford toward your highest-interest balance. The sooner you knock out your high-interest debt, the more money you'll have to work with each month and the easier it will be to work your way through your remaining debts and contribute to your emergency fund.
5. Create a Bill Payment System
Thirty-five percent of your credit score is based on whether you pay your bills on time, so if you want to improve your credit score, getting on top of your due dates is a great place to start. Look at recent bills and add the due dates to your credit card list. Then, use an electronic calendar system like Outlook or an old-fashioned paper calendar to remind yourself of these due dates each and every month. A checking account with online bill pay can also help you get organized by allowing you to see and pay all of your bills in one place. Some online bill payment systems, like Ally Bank's, can be synched up with your other accounts to let you know how much you owe and when it's due.
In addition to hurting your credit score, late payments cost you money. If you avoided just one $30 late fee per month you would save $360 in a year. That's money you could put toward paying down your debt instead of adding to it.
6. Start Budgeting
If you know exactly how much money you have coming in and going out every month, not only are you likely to spend less because you will be holding yourself accountable for your spending, but you'll also know how much you can afford to put toward paying down your credit card debt each month.
The Bottom Line
In the process of improving your credit score, you'll also be improving your overall financial situation. So even if you don't plan to do anything that will require you have an attractive credit score (like open a new credit card account, take out an auto loan or apply for a mortgage), taking these actions will be worthwhile.
by Amy Fontinelle Yahoo Finance May 31, 2011
Spring-cleaning-for-your-credit-score-investopedia
Spring-cleaning-for-your-credit-score-investopedia
It's springtime. The chaos of the holidays is long gone, spring break is over, and summer hasn't arrived yet. Excuses are easy to come by when summer is in full-swing, so why not take advantage of this temporary lull and get your finances in order now? These six tips will help you get your finances organized and get your credit score cleaned up.
Spring-cleaning-for-your-credit-score-investopedia
1. Check Your Credit Report
Any time you're trying to improve your credit score, your first step should be to check your credit report. You can get one free report every 12 months from each of the three credit bureaus (Experian, Equifax and TransUnion) by going to AnnualCreditReport.com. Look closely at each account on your report to make sure that there are no mistakes dragging down your score. Also, make sure that you recognize all of the accounts on your report. Unfamiliar accounts could be a sign of identity theft, though often they are just old accounts that you've forgotten about or accounts for which you are an authorized user but not the primary account holder. Don't panic until you research them further.
2. Assess Your Credit Card Debt
If you don't know the details of your debt, you probably don't have an effective plan for paying it off. Make a list of all the cards that you carry a balance on, how much you owe on each, and what the interest rate is. This way, you'll know which accounts are costing you the most and you can plan to pay them off first.
If you've living off your credit cards because you're unemployed or underemployed, assess your available balances. Also note which cards have lower interest rates and use those for your purchases if possible.
If you added to your debt last Christmas, start thinking now about how you will avoid doing the same thing this year. May isn't too early to plan for the holidays -- you still have time to gradually buy gifts over the course of the year, as you can afford them, or time to save up a holiday fund so you don't have to pay interest on 2011's gifts in 2012 and beyond. A Black Friday deal isn't a deal at 30% APR.
3. Improve Your Interest-Rate Situation
It may not be possible to qualify for a new card with a lower interest rate if you have poor credit, but it might be worth trying. If you do get approved, make sure you understand the balance transfer fees before moving your high-interest debt, and make sure you'll come out ahead even after the fees. Applying for new credit does temporarily ding your credit score, but the savings from lowering your interest rate can be substantial.
You can also try calling your creditors to negotiate a lower interest rate. If that doesn't work, see if you can at least get your card's annual fee waived (if it has one). Develop a strategy before you call because you'll need a way to convince your creditors that there's something in it for them if they give you a break.
4. Prioritize Your High-Interest Debt
Whichever card has the highest interest rate is the one you need to pay off first. Keep paying the minimum on your other cards (and pay on time), and put what you can afford toward your highest-interest balance. The sooner you knock out your high-interest debt, the more money you'll have to work with each month and the easier it will be to work your way through your remaining debts and contribute to your emergency fund.
5. Create a Bill Payment System
Thirty-five percent of your credit score is based on whether you pay your bills on time, so if you want to improve your credit score, getting on top of your due dates is a great place to start. Look at recent bills and add the due dates to your credit card list. Then, use an electronic calendar system like Outlook or an old-fashioned paper calendar to remind yourself of these due dates each and every month. A checking account with online bill pay can also help you get organized by allowing you to see and pay all of your bills in one place. Some online bill payment systems, like Ally Bank's, can be synched up with your other accounts to let you know how much you owe and when it's due.
In addition to hurting your credit score, late payments cost you money. If you avoided just one $30 late fee per month you would save $360 in a year. That's money you could put toward paying down your debt instead of adding to it.
6. Start Budgeting
If you know exactly how much money you have coming in and going out every month, not only are you likely to spend less because you will be holding yourself accountable for your spending, but you'll also know how much you can afford to put toward paying down your credit card debt each month.
The Bottom Line
In the process of improving your credit score, you'll also be improving your overall financial situation. So even if you don't plan to do anything that will require you have an attractive credit score (like open a new credit card account, take out an auto loan or apply for a mortgage), taking these actions will be worthwhile.
by Amy Fontinelle Yahoo Finance May 31, 2011
Spring-cleaning-for-your-credit-score-investopedia
Spring-cleaning-for-your-credit-score-investopedia
It's springtime. The chaos of the holidays is long gone, spring break is over, and summer hasn't arrived yet. Excuses are easy to come by when summer is in full-swing, so why not take advantage of this temporary lull and get your finances in order now? These six tips will help you get your finances organized and get your credit score cleaned up.
Spring-cleaning-for-your-credit-score-investopedia
1. Check Your Credit Report
Any time you're trying to improve your credit score, your first step should be to check your credit report. You can get one free report every 12 months from each of the three credit bureaus (Experian, Equifax and TransUnion) by going to AnnualCreditReport.com. Look closely at each account on your report to make sure that there are no mistakes dragging down your score. Also, make sure that you recognize all of the accounts on your report. Unfamiliar accounts could be a sign of identity theft, though often they are just old accounts that you've forgotten about or accounts for which you are an authorized user but not the primary account holder. Don't panic until you research them further.
2. Assess Your Credit Card Debt
If you don't know the details of your debt, you probably don't have an effective plan for paying it off. Make a list of all the cards that you carry a balance on, how much you owe on each, and what the interest rate is. This way, you'll know which accounts are costing you the most and you can plan to pay them off first.
If you've living off your credit cards because you're unemployed or underemployed, assess your available balances. Also note which cards have lower interest rates and use those for your purchases if possible.
If you added to your debt last Christmas, start thinking now about how you will avoid doing the same thing this year. May isn't too early to plan for the holidays -- you still have time to gradually buy gifts over the course of the year, as you can afford them, or time to save up a holiday fund so you don't have to pay interest on 2011's gifts in 2012 and beyond. A Black Friday deal isn't a deal at 30% APR.
3. Improve Your Interest-Rate Situation
It may not be possible to qualify for a new card with a lower interest rate if you have poor credit, but it might be worth trying. If you do get approved, make sure you understand the balance transfer fees before moving your high-interest debt, and make sure you'll come out ahead even after the fees. Applying for new credit does temporarily ding your credit score, but the savings from lowering your interest rate can be substantial.
You can also try calling your creditors to negotiate a lower interest rate. If that doesn't work, see if you can at least get your card's annual fee waived (if it has one). Develop a strategy before you call because you'll need a way to convince your creditors that there's something in it for them if they give you a break.
4. Prioritize Your High-Interest Debt
Whichever card has the highest interest rate is the one you need to pay off first. Keep paying the minimum on your other cards (and pay on time), and put what you can afford toward your highest-interest balance. The sooner you knock out your high-interest debt, the more money you'll have to work with each month and the easier it will be to work your way through your remaining debts and contribute to your emergency fund.
5. Create a Bill Payment System
Thirty-five percent of your credit score is based on whether you pay your bills on time, so if you want to improve your credit score, getting on top of your due dates is a great place to start. Look at recent bills and add the due dates to your credit card list. Then, use an electronic calendar system like Outlook or an old-fashioned paper calendar to remind yourself of these due dates each and every month. A checking account with online bill pay can also help you get organized by allowing you to see and pay all of your bills in one place. Some online bill payment systems, like Ally Bank's, can be synched up with your other accounts to let you know how much you owe and when it's due.
In addition to hurting your credit score, late payments cost you money. If you avoided just one $30 late fee per month you would save $360 in a year. That's money you could put toward paying down your debt instead of adding to it.
6. Start Budgeting
If you know exactly how much money you have coming in and going out every month, not only are you likely to spend less because you will be holding yourself accountable for your spending, but you'll also know how much you can afford to put toward paying down your credit card debt each month.
The Bottom Line
In the process of improving your credit score, you'll also be improving your overall financial situation. So even if you don't plan to do anything that will require you have an attractive credit score (like open a new credit card account, take out an auto loan or apply for a mortgage), taking these actions will be worthwhile.
by Amy Fontinelle Yahoo Finance May 31, 2011
Spring-cleaning-for-your-credit-score-investopedia
Spring-cleaning-for-your-credit-score-investopedia
It's springtime. The chaos of the holidays is long gone, spring break is over, and summer hasn't arrived yet. Excuses are easy to come by when summer is in full-swing, so why not take advantage of this temporary lull and get your finances in order now? These six tips will help you get your finances organized and get your credit score cleaned up.
Spring-cleaning-for-your-credit-score-investopedia
1. Check Your Credit Report
Any time you're trying to improve your credit score, your first step should be to check your credit report. You can get one free report every 12 months from each of the three credit bureaus (Experian, Equifax and TransUnion) by going to AnnualCreditReport.com. Look closely at each account on your report to make sure that there are no mistakes dragging down your score. Also, make sure that you recognize all of the accounts on your report. Unfamiliar accounts could be a sign of identity theft, though often they are just old accounts that you've forgotten about or accounts for which you are an authorized user but not the primary account holder. Don't panic until you research them further.
2. Assess Your Credit Card Debt
If you don't know the details of your debt, you probably don't have an effective plan for paying it off. Make a list of all the cards that you carry a balance on, how much you owe on each, and what the interest rate is. This way, you'll know which accounts are costing you the most and you can plan to pay them off first.
If you've living off your credit cards because you're unemployed or underemployed, assess your available balances. Also note which cards have lower interest rates and use those for your purchases if possible.
If you added to your debt last Christmas, start thinking now about how you will avoid doing the same thing this year. May isn't too early to plan for the holidays -- you still have time to gradually buy gifts over the course of the year, as you can afford them, or time to save up a holiday fund so you don't have to pay interest on 2011's gifts in 2012 and beyond. A Black Friday deal isn't a deal at 30% APR.
3. Improve Your Interest-Rate Situation
It may not be possible to qualify for a new card with a lower interest rate if you have poor credit, but it might be worth trying. If you do get approved, make sure you understand the balance transfer fees before moving your high-interest debt, and make sure you'll come out ahead even after the fees. Applying for new credit does temporarily ding your credit score, but the savings from lowering your interest rate can be substantial.
You can also try calling your creditors to negotiate a lower interest rate. If that doesn't work, see if you can at least get your card's annual fee waived (if it has one). Develop a strategy before you call because you'll need a way to convince your creditors that there's something in it for them if they give you a break.
4. Prioritize Your High-Interest Debt
Whichever card has the highest interest rate is the one you need to pay off first. Keep paying the minimum on your other cards (and pay on time), and put what you can afford toward your highest-interest balance. The sooner you knock out your high-interest debt, the more money you'll have to work with each month and the easier it will be to work your way through your remaining debts and contribute to your emergency fund.
5. Create a Bill Payment System
Thirty-five percent of your credit score is based on whether you pay your bills on time, so if you want to improve your credit score, getting on top of your due dates is a great place to start. Look at recent bills and add the due dates to your credit card list. Then, use an electronic calendar system like Outlook or an old-fashioned paper calendar to remind yourself of these due dates each and every month. A checking account with online bill pay can also help you get organized by allowing you to see and pay all of your bills in one place. Some online bill payment systems, like Ally Bank's, can be synched up with your other accounts to let you know how much you owe and when it's due.
In addition to hurting your credit score, late payments cost you money. If you avoided just one $30 late fee per month you would save $360 in a year. That's money you could put toward paying down your debt instead of adding to it.
6. Start Budgeting
If you know exactly how much money you have coming in and going out every month, not only are you likely to spend less because you will be holding yourself accountable for your spending, but you'll also know how much you can afford to put toward paying down your credit card debt each month.
The Bottom Line
In the process of improving your credit score, you'll also be improving your overall financial situation. So even if you don't plan to do anything that will require you have an attractive credit score (like open a new credit card account, take out an auto loan or apply for a mortgage), taking these actions will be worthwhile.
by Amy Fontinelle Yahoo Finance May 31, 2011
Spring-cleaning-for-your-credit-score-investopedia
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