FICO CREDIT SCORES START REVEALING SECRETS TO CONSUMERS

By The 2000 Tribune Media Services, Inc

What do lenders look at when deciding whether to approve a loan? Typically, lenders making almost any kind of credit decision will look at a variety of types of information, including one or more credit scores. While there are many kinds of credit scores, the most frequently used are credit bureau risk scores developed by Fair, Isaac. These are commonly known as FICOŽ scores, although they have different names at each of the national credit reporting agencies.
 
A score is a number that tells a lender how likely an individual is to repay a loan, or make credit payments on time. When a lender requests a credit report and score from a credit reporting agency, the score is calculated by a "scorecard" or scoring model — a mathematical equation that evaluates many types of information from your credit report at that agency. By comparing this information to the patterns in thousands of past credit reports, scoring identifies your level of credit risk.
 
The five categories, and the degree to which each contributes to your FICO, are:
 

1.       Payment history accounts for about 35% of the score. It’s the main thing lenders look at.  Just because a person always pays their bills on time doesn’t necessarily mean they will end up with a high FICO score.  Payment records are only part of your track record.  A 30 –day late payment made last month counts against your score more than a 90-day late payment from 5 years ago.  The biggest black marks are items on the public record, such as bankruptcies, credit related judgments, collection items, suits and liens.

2.       How much you owe on credit makes up 30% of your score.  Having several open accounts could easily cause you to over extend yourself.  In other words FICO considers “How much is too much.”

3.       Length of credit history accounts for 15%.  How long have your accounts been established? How old is your oldest account?  What’s the average age of all your accounts?

4.       How much debt you’ve been taking on represents 10% of your score.  For instance, how many credit applications have you filled out lately? (Lenders always make inquiries to credit bureaus, these all go on your record.)  If you had an earlier credit problem, did you reestablish your credit and make timely payments? If so, your FICO score can raise.

5.       The types of credit you have accounts for 10% of your score.  They compare credit cards, installment loans and mortgages.  They look at how many of each you have.

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CREDITOR CORNER

(The who’s who and the what’s new in the creditor world of today!)

HARRIS BANK-PARTNERS FIRST-BANK OF BOSTON-WACHOVIA-FLEET

If an account on your debt management program is now, or at one time was, handled by one of the above listed banks, please send a copy of a current billing statement to:

CREDIT ADVISORS
ATTN: CREDITOR LIAISON
1818 S 72^ND STREET
OMAHA NE 68124

OR FAX TO 402 393 1579 ATTN: CREDITOR LIAISON

Through a series of mergers and portfolio acquisitions, these creditors have combined and sold off portions of their credit card holdings to one another.  In some cases, the banks have been forwarding payments sent to them to the new holder of the account without notifying Credit Advisors that the account has been sold.  Rather than have delays in posting, or lost payments, CA would like to ensure that your payments are indeed going to the correct creditor.  Usually, we can sort these out by the first few digits of your account number, but in this situation, the creditors are continuing to share BIN #’s rather than assign new account numbers to the accounts over and over as they transfer from one bank’s ownership to another.

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CROSS COUNTRY

Good news! From now on, Cross Country will (upon approval of a proposal and posting of the first payment at the new proposed amount) reduce interest to 10%, stop over limit charges and late fees, and re-age your account after three consecutive payments have been made.  This is great news for anyone who was still getting regular calls from the collection department above over limit amounts even after the proposals had been accepted.  Check your statements and give us a call if you need follow up on a particular account.

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Send Statements

Please e-mail, fax, or mail us copies of your creditor statements every three months.

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