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Have you ever wondered where the numbers in credit reports actually
come from? Here is a simple example of a credit bureau model
and the score computation for different factors:
|
Category |
Attributes |
Points |
|
Number of
Bank Card |
0 |
12 |
|
1 |
22 |
|
2 |
30 |
|
3 |
40 |
|
4 |
30 |
|
5 or more |
25 |
|
|
|
|
|
Number of
Finance Tradeline |
0 |
75 |
|
1 |
55 |
|
2 |
40 |
|
3 |
35 |
|
4+ |
20 |
|
|
|
|
|
Number of
months in file |
less then
12 |
12 |
|
12-23 |
35 |
|
24-47 |
60 |
|
48+ |
65 |
|
|
|
|
|
Number of
months since recent bank card open |
No
bankcard |
32 |
|
Bankcard,
but no open date |
32 |
|
0-5 |
20 |
|
6-11 |
25 |
|
12-17 |
30 |
|
18-23 |
38 |
|
24-35 |
45 |
|
36+ |
52 |
|
|
|
|
|
Number of
months since the most recent derogatory credit or public
record |
None |
75 |
|
0-5 |
10 |
|
6-11 |
15 |
|
12-24 |
25 |
|
24-47 |
38 |
|
48+ |
50 |
Analysis General Guidelines
IN GENERAL, the following guidelines hold true:
- having three credit cards is better than having 2 or 4 or
more:
- finance company tradelines/accounts hurt your score
- the more credit experience you have, the better
- not opening a new credit card helps your score
- no collections or judgments is best, and if/once you have one
in your credit report, it'll take 48 months for that derogatory
record to wear off, but your score will never go as high as it
was, regarding this single factor only.
Only Part of the Picture
The above factors only account for about
70% of your credit score.
The other 30% is outstanding debt utilization, meaning how much of
the available credit line is being used on each account.
Using/drawing on more than 33% of your ability works against you,
i.e. if you have 3 credit cards with $6,000.00 limits, and only
$2,000.00 drawn/balance on each, your score will be higher than if
you have 1 credit card with a $7,000.00 limit and a $6,000.00
balance.
Remember
Remember that credit scores are fluid numbers that change as the
elements in your credit report change, and each bureau has different
data in your "account" with them. Scores may be different from
lender to lender (or from car loan to mortgage loan) depending on
the type of credit scoring model that was used. Because of all the
different factors it is NOT advisable to try to "fix" your
credit score without talking to a professional first.
Your Credit Report
CONTRARY TO MOST CREDIT INFORMATION SORCES, WE DO NOT recommend
pulling your credit report more often than once a year, UNLESS you
feel it has been compromised. Pulling from websites like
www.myfico.com
is our current best recommendation, and pulling your report there
doesn't lower your score, or you can go directly to the bureaus. If
you pull your report and/or have a professional pull it, more often
than every 90 to 180 days, that activity will lower your score. When
you pull your credit make sure you know every tradeline that is on
your report.
More on this subject can be found on our
Credit Scoring page.
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