Credit Score
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Your CREDIT SCORE is a result of a statistical analysis of your credit history, which is embodied in your credit files.


Years ago it was a well-kept secret. You did not have access to it even though it affects many aspects of your life. This number could influence your ability to obtain a mortgage, credit card, loan, and anything having to do with borrowing money. It could also determine if you can get an apartment you covet or not get it. Insurance rates are also often affected by your credit score. It could even mean the difference between getting a job and not getting it.


Credit scores became available in 2001 directly to consumers, for a fee. The all-important FICO scores are computed using a secret formula, and is usually different for each of the 3 credit reporting agencies.


However, starting in February 14, 2009, Experian has discontinued the availability of their credit scores directly to consumers, but it is still available to lenders. This move by Experian is almost certainly based on whatís more profitable to them, without regards to whatís best for the consumer.


My personal opinion is that all these things should be available to the consumer because itís hardly fair that they be a secret when they can impact our finances and other aspects of our lives.


In fact, I think that at least once a year the credit scores should be made available free of charge, just like the credit reports are.


Credit scores from Equifax and TransUnion continue to be available for a fee.


In all fairness, the formula used to compute credit scores should be made public. I hate the fact that a formula, which may be faulty, can be used to determine my happiness and I canít even know the details of this formula.


Your credit history is maintained by each of three major credit reporting agencies and includes all of your credit accounts, mortgages, loans, court records, etc. Anything having to do with how you handle your finances will be recorded here. It includes details of how you pay, credit limits, date opened, collections, lawsuits, judgments, bankruptcies, etc.


It used to be that to see your credit report you had to pay, unless you had been denied credit recently. Nowadays you are entitled to a free report each year. In addition, the formerly secret credit score is now available to you for a nominal fee.


Examining your credit report is not only important but highly recommended. There are often mistakes or even information intentionally placed there by some collection agency of ill repute.


Your FICO credit scores range from 300 to 850 and have these components:

35% is Payment History. Late payments are credit score killers.

30% is
Credit Utilization. The ratio of current revolving debt to the total available revolving credit. The lower the ration, the better. One quick way to raise your score, if you have high balances, is to pay as much as you can, especially to the credit cards where your ratio is higher.

15% is
Length of Credit History. The longer your history the better its impact on your scores, assuming your pay your bills on time.

10% is
Types of Credit Used (installment, revolving, consumer finance). A healthy mix raises your score. Consumer finance is considered negative.

10% is New Credit. Credit inquiries can hurt your score. However, shopping for a mortgage or auto loan over a short period of time will likely not decrease your scores.

Credit scores do not take into account income or occupation and, by law, cannot consider race, religion, national origin, sex, or marital status.


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