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# By Your Name Your Company Name Date - PowerPoint PPT Presentation

Your Credit Score. By Your Name Your Company Name Date. A 3-digit number used by lenders to evaluate the risk associated with lending you money It is generated by a mathematical model created by Fair Isaac & Company in the 1950’s.

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Presentation Transcript

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A 3-digit number used by lenders to evaluate the risk associated with lending you money

It is generated by a mathematical model created by Fair Isaac & Company in the 1950’s.

There are 3 Major Credit Bureaus, Equifax, Experian and Trans Union –You have 3 Scores

Scores range from 350-850

What is a Credit Score?

What is a Good Score? associated with lending you money

• Above 720 = Excellent

• = Good

• = Fair

• Below 620 = Poor

The Cost of Bad Credit associated with lending you money

HOW MUCH WOULD YOUR MIDDLE SCORE COST YOU IN A MORTGAGE LOAN TRANSACTION AT TODAYS RATES?

Home Financing: A 30-Year Fixed with a loan principal amount of \$359,650*

• If your score improves to 720-850, you couldsave an additional \$318,329

• If your score improves to 700-719, you couldsave an additional \$308,047

• If your score improves to 675-699, you could save an additional \$263,094

• If your score improves to 620-674, you could save an additional \$163,422

A borrower who increases his or her credit score from 620 to 720+ can potentially save \$884 per month on mortgage payments, \$10,608 per year, and approximately \$318,329 over the life of the 30-year loan.*

Five Factors of Credit Scoring associated with lending you money

Payment History

Late Pays

Collections

Charge-Offs

Repossessions

Foreclosures

Tax Liens

BK’s

Judgments

Length of History

New Credit

Soft Inquiries

Hard Inquiries

Types of Credit Used

A Mortgage Loan

An Auto Loan

2-3 Major Credit Cards

Amounts Owed

Credit Cards

Mortgage Loans

Auto Loans

HELOC’s

Installment Loans

1. associated with lending you moneyPayment History 35% – How do you pay your bills?

WHAT YOU SHOULD KNOW

• A recent

• Paying a collection

• Being past due

• Derogatory accounts do NOT

• A divorce decree

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2. associated with lending you moneyAmounts Owed 30% – Managing Your Debt

WHAT YOU SHOULD KNOW

• New debt

• Keep balances below

• When preparing to

• Don’t consolidate

• If you go over the limit on your credit card

• HELOC’s

• Do not close credit cards EXCEPT

• USE YOUR CREDIT CARDS or

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3. associated with lending you moneyLength of History 15% 4. Mix of Credit 10%

WHAT YOU SHOULD KNOW

• Hold onto

• New credit users

• The best mix of credit is

• The type of credit card matters because

• The best amount of credit cards to have is

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5. Inquiries – 10% associated with lending you money

WHAT YOU SHOULD KNOW

• Soft vs. Hard Inquiries

• 14 Day

• Inquiries affect the score

• Inquiries can cost between

• You are Pre-Approved means

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START IMPROVING YOUR CREDIT SCORES TODAY! associated with lending you money

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