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About Credit Scores Do you have a question about your credit score? Below you will find information that will help you better understand the basics about credit scores! How Is a credit score model developed To develope a model,a creditor selects a rondom sample of its customers, or a sample of similar customers if their sample is not large enough, and analyzes it statistacally to identify characteristics that relate to creditworthiness. Then each of these factors is assigned a weight based on how strong a predictor it is of who would be good credit risk. Each creditor may use its own credit risk. Each creditor may use its own credit scoring model, different types of crdit or a generic model developed by a credit scoring company. 1. Pay your bills Most imporant is how you've paid your bills, with emphasis on recent actvity. Paying on time is good. Paying them late is bad. Accounts sent to collections are worse. Bankruptcy is the worst. 2. Wise use How much money you owe. People with the highest scores use credit sparingly and keep their balances low. Key factors Pay on time 35% Wise use 30% Length 15% Mix 10% Inquires 10% 3. Length of credit The longer you've had credit - particularly if it's with the same credit issuers the more points you get. 4. Mix of Credit Statistically, consumers with a richer variety of experiences are better credit risks. They know how to handle money. 5. Inquiries How many credit applicatins you're filling out. Scores consider rate shopping to allow you to find the best loan. What doesn't count in a score? Age Race Job length of employment Income Education Marital Status Whether you've been turned down for credit Length of time at your current address Whether you own a home or rent Credit Score Break Out Fair Isaac reports that American public's credit scores break out along these lines: Score Percentage 499 and below 1% 500-549 5% 550-599 7% 600-649 11% 650-699 16% 700-749 20% 750-799 29% 800 and above 11% HIGHER IS BETTER Maximize Your Credit Score 1. Get your credit report - so you know the starting point 2. make sure everything listed is really yours 4. pay-off collection accounts 5. Get your debt to credit limit ratio down to 40% or less A. Pay off your debt B. Ask for an increase in credit limits (don't use it) 6.Cancel excess credit cards A. unless it will bring your debt to credit limit ratio over 40% B. keep the oldest cards - the longer you have credit the better 7. Pay your bills on time 8. To have any credit history you must have borrowed money in the last two years. Information supplied by the CBF SERVICES in Farmington, NM