Understanding Your Credit Score
How Much Does a Low Fico or Beacon Score Cost You?
Do You Have Credit Cards?
If you have a low Fico or Beacon score you will be in the Jilted category, getting a good rate on a credit card is simply out of the question. If you do get a credit card, you may be hit with high interest rates, upfront set-up fees, reoccurring monthly fees and cash deposits.
Automobile Loans
Your payments on an automobile will go through the roof with bad credit. Here are examples.
$20,000 auto loan over 5 years
| Category | Interest Rate | Payment | Total Cost After 5 Years |
| Prime | 7% | $405 | $24,300 |
| Subprime | 14% | $477 | $28,620 |
| Hardy Money (Jilted) | 21% | $557 | $33,420 |
Home Loans
$100,000 home loan over 30 years
| Category | Interest Rate | Payment | Total Cost After 30 Years |
| Prime | 6.50% | $632 | $228,625 |
| Alternative A | 7.50% | $699 | $251,715 |
| Subprime | 10% | $877 | $315,925 |
| Hard Money (Jilted) | 14% | $1,184 | $426,553 |
Having bad credit can cost you hundreds of dollars.
Do you need to raise your credit score?
What Affects Your Credit FICO Score?
There are 5 factors used in coming up with your overall credit score.
Payment History is 35% of your score
Payment history is determined by if you pay your accounts on time.
Payment history includes any loan that you have had to make monthly payments on. For I.E, automobile loans, home loans, gas credit cards, retail stores and banks.
If you are late on an account it can it is possible it will turn into a public account or collection account. These may include bankruptcies, lawsuits, liens, collections, wage attachments and judgments. These are very serious accounts and hurt your credit score dramatically.
Security- How delinquent is the payment? Have you been thirty,sixty,ninety or hundred twenty days late? Is it still outstanding? Paying on time will increase your Beacon or Fico Score greatly.
Recent history- How long ago where you delinquent? Are you still delinquent? Recent late payments can hurt your score by 100 points.
Prevalence- Obligations, how many do you have? What percentages of your accounts are late now?
How Much You Owe is thirty percent of Your Score
Can you make your payments and pay your home bills on time and still have money to spend on every day activities?
What type of account is it? Different kinds of credit accounts are figured differently. Credit cards are different than mortgages in factoring your score or determining if you apply for a loan.
It is important to look at how much credit debt you have. A lot of accounts with small balances may lower credit score because you could run up those balances If you run into finacial trouble. If you have not used a credit card in many years, it is good to close it. Paying down your debt below 30% will help keep your credit FICO score high. Try to keep the amount of credit cards you keep down to a minimum. Three or four open credit cards are a good amount to have.
If your credit cards are almost maxed out, it is affecting your score, even if you have made your payments on time. Lenders do not want to see high balances because it shows that you may not have the money to pay anymore than the minimum payment.
Amount of Time Credit Has Been In Use is Fifthteen Percent of your FICO or Beacon score
The longer you have credit history, the higher the score as long as the credit you have has been in good standings. That means that older people that have always had good credit will probably have higher beacon scores than someone who is younger with good credit, but young people can still have a good credit score.
important to look at how long have you had an account and how long has been in the credit report. The average age of your accounts are taken into factored when calculating your credit score. You must also use the accounts that you have. If it has been long time since you have used an account, it may not hold much of a score. Using the accounts you have will help your score.
Inquiries are ten percent of your
It is easier to obtain credit these days through the internet, via mail, and many other ways. Each time you give someone permission to run your credit and you get an inquiry, and it can lower your credit FICO score. Home and Automobile loans are treated differently for example auto loans made within 14 days are counted as one Any inquiry will affect you score. Every time you fill out a credit application, you get one or more inquiries. A lot of inquiries look bad. Almost any inquiry is not good, there are neutral ones that don't hurt your score.Pre-approval inquiries are when a credit card company has looked at your credit to determine whether they want to offer you a loan. These are not factored in to your score, but once you fill out an application with the lender, it will show up to be a bad inquiry that does hurt your score.
Periodic Review inquiries are when lenders periodically review your credit to see if there are any major changes. If they see a major change in your score they may close your account. These are also not supposed to be factored into your FICO score. Inquiries can show a banker how often you are trying to open up new accounts and how recent those attempts were.
Primary consideration is given to the following:
- Number of inquiries in last six months
- Number of accounts opened in the last year
- Number of months since most recent inquiry
How inquiries are computed is somewhat complex and they should be avoided if possible.
Types of Credit Experience is 10% of your score
It's awesome to have a different kinds of accounts. Having installment accounts, retail accounts, credit cards and a mortgage is good. Since this is only worth 10% of your score, it is not a big factor but can help. Do not go out a try to open different kinds of accounts because a bad mix may hurt you and lower your score.
Do you have questions about raising your Credit Score?
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