Posted on: 27th Apr, 2007 06:59 am
FICO SCORES
Understanding the crossroads that lead to explaining the score.
Approximate Credit Weight for each year
Source: http://www.cwcu.org/library/credit_scores.htm
[Edited As per Forum Rules - By Caron]
Understanding the crossroads that lead to explaining the score.
Approximate Credit Weight for each year
- 40% = current to 12 months
- 30% = 13-24 months
- 20% = 25-36 months
- 10% = 37+ months
- 35% = based on payment history (i.e. on-time pays or delinquencies)
- More weight on current pay history
- 30% = capacity (capacity is King)
- 15% = length of credit
- 10% = accumulation of debt in the last 12-18 months
- # of inquiries
- opening dates
- # of inquiries
- 10% = mix of credit
- installment (raises) vs. revolving (lowers)
- # of finance company loans the more, the lower the score
- installment (raises) vs. revolving (lowers)
- Debt ratio
- Income
- Length of residence
- Length of employment
- Pay down on credit cards
- Do not close credit cards because capacity will decrease
- Continue to make payments on time (older late pays will become less significant with time)
- Slow down on opening new accounts
- Acquire a solid credit history with years of experience
- Moving revolving debt to installment debt.
- Missing payments (irregardless of $ amounts…It will take
24mo to restore credit with one late pay)
- Credit cards at capacity (i.e. maxing out credit cards)
- Closing credit cards out (this lowers available capacity)
- Shopping for credit excessively
- Opening up numerous trades in a short time period
- Having more revolving loans in relation to installment loans
- Borrowing from finance companies.
Source: http://www.cwcu.org/library/credit_scores.htm
[Edited As per Forum Rules - By Caron]
Good information Will :)
That will help people trying to know more about credit scores but Will if you format it a bit then it would look better.
Colin
Colin
Yes Will, I agree with the points you have mentioned here about credit score. But I would surely like to add the following tips.
- One should not have several installment loans as they are bound to reduce the score. Instead, one can have a combination of installment loans and credit cards requiring payments at fixed rates.
- It is better to avoid opening too many new accounts for someone who has already been through credit problems in the past.
- One should avoid too many credit inquiries carried out within a short range of time. This would imply that you aren't opening multiple accounts and will not affect the score.