Credit Scores - Fair Isaac Corporation (Page 4 of 5) in pdf

Credit Scores - Fair Isaac Corporation Page 4

The First 3 Factors = 80% of your Credit Score

4) 10% - New Credit: Red flags go up when several accounts are opened in a

short period of time. New credit factors include:

Multiple credit requests/inquiries. However, credit inquiries that were

made on your credit within the prior 30 days don’t count towards your

score. Also, inquiries older than 30 days that occur within a ―typical

shopping period‖ for the same type of transaction (home loans, car

loans) will only count as one inquiry.

How long it has been since a new account was opened and the type of

account that was opened.

Hard inquiries: Length of time since lenders made credit report inquiries.

Score:

Shop for a home or car loan within a 30-day period.

Think twice about store offers to open a new credit card to receive an

instant discount on your purchase. The new account could lower your

credit score and cost you more in interest and insurance rates than

you will have saved with a 10% discount on your purchase. Plus you

should take time to review the details of the offer—hard to do in the

checkout line.

When you apply for new credit, a ―hard inquiry‖ shows up on your

credit report and can affect your credit score for 12 months. Too

many hard inquiries can send the message to creditors that you are

desperate for new credit. (―Soft inquiries‖ don’t affect your score so

don’t worry about ordering your free annual credit reports or a free

report if you’ve been turned down for credit.)

5) 10% - Types of Credit Used: The types of credit includes the following factors:

The mix of accounts including mortgage loans, credit cards, installment

loans, finance company accounts, etc.

This is usually not a major factor in the credit score unless the credit report

does not have a lot of other information to base the score.

Score:

It’s good to have at least one major credit card in addition to retail

store credit cards.

Don’t open new accounts just to have a better credit mix. That could

lower your score more in the short term.

―Payday‖ and title loans may not report to Credit Reporting Bureaus

unless you miss a payment. Even if the lenders do report regular

payments to the Bureaus – be careful using these higher cost forms

of debt since other lenders may view them negatively.

Credit Scores - Fair Isaac Corporation Page 4