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FAQ
Rates
Real Estate
Helpful Information |
Questions and Answers
Answer:
Scoring models such as FICO generally evaluate the following types
of information in your credit report and are weighted as suggested
by the percent shown:
On Time Payment -
35%
Have you paid your bills on time? Payment history typically is a
significant factor. Your score will be affected negatively if you
have paid bills late, had an account referred to collections, had
repossession, or declared bankruptcy.
Amount Owed Versus
Capacity - 30%
What is your outstanding debt? Many scoring models evaluate the
amount of debt you have compared to your credit limits. If the
amount you owe is close to your credit limit that is likely to have
a negative effect on your score. Authorities suggest 30%-60% as
desirable by creditors. Maintaining a low balance on multiple cards
is better than high balances on one… but don’t run out for more
cards to “even out” balances just before applying for a loan.
Length Of Credit
History - 15%
How long is your credit history? An insufficient credit history may
have a negative effect on your score, but that can be offset by
other factors, such as timely payments and low balances. If you are
going to close an account try to maintain the oldest accounts as age
of account matters.
New Credit Accounts
- 10%
Have you applied for new credit recently? If you have applied for
too many new accounts recently or had to many recent inquiries, that
may negatively affect your score. However, not all inquiries are
counted. Inquiries by creditors who are monitoring your account or
looking at credit reports to make “pre-screened” credit offers are
not counted.
Types Of Credit In
Use - 10%
How many and what types of credit accounts do you have? Although it
is generally good to have established credit accounts, too many
credit card accounts may have a negative effect on your score. In
addition, many models consider the type of credit accounts you have.
For example, under some scoring models, loans from finance companies
(rather than a bank) may negatively affect your credit score.
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