CONSUMER INTEREST IN CREDIT SCORES
More and more individuals
are taking an interest in the FICO credit score used by lenders to determine
their risk in making credit decisions. Two of the most frequently asked
questions are: "What is used in determining my score?" and "How much impact do
certain activities have on my score?"
The FICO score falls in
the range between 300 and 850, with the higher the score, the lower the risk
to lenders when extending new credit. In order for a score to be computed from
a credit report, the file must contain at least one account that has been open
for six months or longer and must contain at least one account that has been
updated within the previous six months.
The FICO credit score
evaluates information from five categories, including:
|
Payment History |
-- |
35% of score based
on this information |
|
Amounts Owed |
-- |
30% of score based
on this information |
|
Length of Credit
History |
-- |
15% of score based
on this information |
|
New Credit |
-- |
10% of score based
on this information |
|
Type of Credit Used |
-- |
10% of score based
on this information |
For most people, a credit inquiry will take less than five
points off their FICO score. Also, when auto or mortgage shopping, several
lenders may look at the credit file, but multiple inquiries within a 14-day
period are counted as one.
Individual Credit Scores are available through Equifax. In addition, they
offer a new service, Score Watch, which allows the consumer to monitor their
score over the year, allowing them to plan for purchases and be prepared to
speak with a lender.
EQUIFAX SCORE WATCH
Credit Bureau Associates
