| Credit and how it works for and against us |
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| Written by Greg Snow |
| Monday, 23 January 2012 15:45 |
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Credit, or lack thereof, influences our lives daily, and sometimes by the minute. Ever since Credit Bureau Scores were developed in the 1980's, to help banks and financial branches make fast, objective decisions on lending money, before moving on into mortgage and auto loans, the consumer has been affected by the credit score supplied by one, or all of the big three (Experian, Equifax, Trans Union). Whether it's your "Beacon", "Fair Issac"or "Emperica" scores used to evaluate an offering of credit, your scorecard helps or hinders what you want to do, when, how, and sometimes with whom you may involve yourself in receiving a loan, credit cards, or other revolving money. FICO, the Minneapolis company that produces the scoring model, divulges the five factors that determine your magic number -- your payment history, the amount you owe on credit lines and loans, the length of your credit history, how much new credit you've applied for, and the types of accounts you've had -- plus what percentage of your score each factor represents 35% based on payment history, good payment history certainly helps your score. 30% on amount owed, number of accounts with balances, the balances compared with available credit limit,and the overall amount owed on all accounts are the factors alling into this category. 15% length of credit history, opening too many accounts in a short period of time hurts this category. New credit counts for about 10% of credit scores and types of credit in use count for 10%. Number of new accounts and how long the consumer has had them is important. All mortgage and auto loan inquires within a 14 day period only count as one inquiry, and do not count toward a consumers score within 30 days from the date a credit report was drawn. Keep watch for more on Credit :) |
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