1 / 33

Credit Scoring…

Credit Scoring…. Protecting Your Future and your Capital. CREDIT SCORE!. What Does it Mean?. What Does The Score Mean? . Determine how much money you can borrow, and how much interest you’ll pay. Each score is specific for each bureau Scores range from… 300 to 850 for Classic FICO

kyne
Download Presentation

Credit Scoring…

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Credit Scoring… Protecting Your Future and your Capital

  2. CREDIT SCORE! What Does it Mean?

  3. What Does The Score Mean? • Determine how much money you can borrow, and how much interest you’ll pay. • Each score is specific for each bureau • Scores range from… • 300 to 850 for Classic FICO • The higher the score the lower the risk • The score is generated by analyzing the information contained in the consumer’s credit report at a particular point in time

  4. Other names for FICO Score • Equifax – BEACON® Score • Experian – Experian/Fair Isaac Risk Model • TransUnion – EMPIRICA®

  5. Other Scoring Models • Vantage Scoring Model • Unveiled on march 14 2006 • Driven by the Big 3 • Score range from 501-990 • Scores Combine a letter to the Score: A: 900–990 B: 800–899 C: 700–799 D: 600–699 F: 501–599 In 2013 adopted the 300-850 range

  6. Other Scoring Models • Plus Score • Developed By Experian Decision Analytics • Ranges from 330 – 830 • Used primarily for consumer reports • Trans Risk Score • Developed By Transunion • Ranges from 300 – 850 • Used primarily for consumer report

  7. Scoring Models

  8. CREDIT SCORE! Consumer Default: What are the Odds?

  9. Odds on Consumers: 90 Days Late

  10. Odds on Consumers: 90 Days Late FORGET IT!

  11. A Low Credit Score Can Cost You BIG! Compare 30 yr fixed rates on a $500,000 home

  12. Jack & Brad: $500,000/30yr. Fixed

  13. Jack & Brad: $500,000/30yr. Fixed

  14. Jack & Brad: $500,000/30yr. Fixed

  15. Jack & Brad: $500,000/30yr. Fixed

  16. CREDIT SCORE! What are the determining factors?

  17. Credit Score Components • Payment history • Amounts Owed • Length of credit history • Types of credit in use • New credit

  18. 1. Payment history… 35% of Credit Score

  19. 1. Payment history:35% of Credit Score • Many types of accounts are considered for payment history • Credit Cards • Retail Accounts • Installment Loans • Finance company accounts • Mortgage loans • Public record and collection items are considered quite serious

  20. 1. Payment history:35% of Credit Score • FICO® Score considers this details on the accounts: • How late they were • How much was owed • How recently they occurred • How many there are • Good track record on credit accounts will increase FICO® Score

  21. CREDIT SCORE! How long dodelinquencies stay?

  22. Delinquencies on Credit Reports • Bankruptcies • Chapter 7, 11 & 1210 Years from filing date • Chapter 13 7 Years from the date paid, and 10 years if not completed • Paid Tax Liens* 7 Years from date released (paid) (For California State Residents Only: or 10 years from the date file) • Unpaid Tax Liens Remain on file indefinitely (For California State Residents Only: 10 years from the file date) • Late Payments 7 Years

  23. Delinquencies on Credit Reports • Charge-offs 7 Years from 1st late pay • Judgments 7 Years from the date filed (For NY State Residents only: 5 years from the date filed) • Collections 7 years from the initial missed payment that led to the collection (For NY State Residents Only: 5 years from the date of last activity) • Inquiries 2 Years

  24. 2. Amounts owed… 30% of Credit Score

  25. 2. Amounts owed: 30% of Score • Amount owed on all accounts • Amount owed on specific types, such as credit cards and installment loans. • How many accounts have balances • How much of the total credit line is being used and other “revolving” credit accounts • How much of the installment loan amounts is still owed, compared with the original loan amount

  26. 3. Length of credit history… 15% of Credit Score

  27. 3. Length of credit history: 15% of Score • How long your credit accounts have been established, including the age of your oldest account, the age of your newest account and an average age of all your accounts • How long specific credit accounts have been established • How long it has been since you used certain accounts.

  28. 4. Types of credit in use… 10% of Credit Score

  29. 4. Types of credit in use:10% of Credit Score • The score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. • People with no credit cards tend to be viewed as a higher risk than people who have managed credit cards responsibly. • A closed account will still show up on your credit report, and its history will be considered by your FICO Score.

  30. 5. New credit… 10% of Credit Score

  31. 5. New credit:10% of Credit Score • It’s OK to request and check your own credit report • Don’t open new accounts to rapidly • How many recent inquiries you have • Length of time since credit report inquiries were made • How long it’s been since you opened a new account

  32. Credit Score Components • Payment history • Amounts owed • Length of credit history • Types of credit in use • New credit

  33. CREDIT SCORE! Now you know!

More Related