Dale Downing's Real Estate Blog

Have you ever tried to finance a house, car, etc….. your FICO score is extremely important?? However most people who have a FICO score don’t know how the 3 credit bureaus calculate the score..

I’ve done some research and I’ve uncovered some interesting information regarding our scores. The three credit reporting agencies in the United States of America, Equifax, Experian, and TransUnion.

Damage Points: How Mistakes Affect Your Score…. Maxed – Out Credit Cards—10-45 points 30 day late payment—60-110 points Debt Settlement – 45-125 points Foreclosure—85-160 points Bankruptcy—130-240 points.

• Evaluate your score. The point system used technically ranges from 0 – 999, but all or nearly all actual scores fall between 330 and 850.

• • 330 – 619: Poor credit. Very little chance of getting loan.
• • 620 – 659: Sub-prime financing will be available.
• • 660 – 720: Prime financing will be available.
• • 721 – 750: Prime–you may be able to get interest rates on loans that are even lower than the prime rate.
• • 751+: Excellent credit.

• Understand what affects your credit. The exact calculation of the FICO score is kept secret as proprietary information, but there are some general guidelines that apply.

• • 35% of your credit score is based on your consistent payment history and only includes payments later than 30 days past due.
• • 30% is based on the percentage of your credit capacity being used; i.e., the ratio of current credit debt in comparison to total available credit or revolving credit.  If you carry very low balances on credit cards, your score will be higher than if all your cards are nearly maxed out.
• • 15% of your score is determined by the length of your credit history.
• • 10% is based on the types of credit you have; i.e., installments (car payments, student loans, or a mortgage), revolving (credit cards or lines of credit), and consumer finance (bank loans and the equivalent).
• • 10% is based on recent searches for credit and/or the amount of credit you’ve recently obtained.