fico http://www.wisebread.com/taxonomy/term/8457/all en-US FICO vs. Fakes: Are You Getting the Wrong Credit Score? http://www.wisebread.com/fico-vs-fakes-are-you-getting-the-wrong-credit-score <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/fico-vs-fakes-are-you-getting-the-wrong-credit-score" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/woman-looking-at-paperwork-iStock_000017685048Small.jpg" alt="looking at paperwork" title="looking at paperwork" class="imagecache imagecache-250w" width="250" height="199" /></a> </div> </div> </div> <p>If you&rsquo;ve applied for a loan recently and had your credit score pulled, chances are you are aware that you have more than one credit score. FICO issues a score, and each of the three major credit bureaus also offers its own credit score, too.</p> <p>Knowing your credit score is important for wise financial management . But you should understand which credit scores are &ldquo;real&rdquo; and which are &ldquo;fake.&rdquo; (See also: <a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score">10 Surprising Ways to Negatively&nbsp;Affect Your Credit Score</a>)</p> <h2>What <i>Is</i> a FICO Score?</h2> <p>This is the credit score most lenders use to determine your creditworthiness. The FICO score comes from the <b>F</b>air <b>I</b>saac <b>Co</b>mpany, which has developed an algorithm to determine your creditworthiness using information contained in your credit reports from the three major credit bureaus (Equifax, TransUnion, and Experian).</p> <p>Lenders and others buy access to the algorithm. Fair Isaac offers different credit scores that emphasize specific borrowing behaviors, such as varying weights for different actions like <a href="http://www.wisebread.com/quiz-am-i-really-ready-to-buy-a-home">buying a home</a> or <a href="http://www.wisebread.com/guide-to-buying-a-used-car-without-going-crazy">buying a car</a>.</p> <p>Your FICO scores from each of the three different credit bureaus are different, too. FICO&rsquo;s formula is applied to the information in each of your credit reports, and since your information may not be the same in all three, your scores can differ.</p> <p>Each bureau has a different name for its FICO, but they all come from Fair Isaac:</p> <ul> <li>Equifax = BEACON Score</li> <li>TransUnion = EMPIRCA</li> </ul> <p>What about Experian, the other of the big three credit bureaus? If you attempt to buy a FICO score from Experian, you&rsquo;ll be out of luck. Experian offers its own, non-FICO credit score for purchase.</p> <p>Fair Isaac has a fairly tight grip on the credit scoring industry, but that doesn&rsquo;t mean that no one else has developed their own credit score algorithms. The catch? These scores might not be what lenders &mdash; particularly mortgage lenders &mdash; use to determine your creditworthiness.</p> <h2>FAKO Scores and Your Credit</h2> <p>Other credit scores have acquired the designation FAKO (from &ldquo;fake-o&rdquo;). For the most part, these are not FICO scores. Instead, they are scores from companies that have developed their own scoring models. These scoring models look similar to FICO scores, and even have a similar scale. Some examples include:</p> <ul> <li><b>VantageScore</b>: This is a scoring model developed by the three major credit bureaus together. It includes information from all three reports. You can get your VantageScore from each of the three credit bureaus. It was designed to compete with FICO, but so far, few lenders actually use it.<br /> &nbsp;</li> <li><b>PLUS</b>: Experian developed its own credit scoring model, based on information in the Experian report. However, this is a consumer credit score and not used by lenders. It&rsquo;s purely educational.<br /> &nbsp;</li> <li><b>TransRisk</b>: The credit bureau TransUnion developed the TransRisk score based on information from that bureau.<br /> &nbsp;</li> <li><b>Experian credit score</b>: This is a score based on the information in your Experian credit report and based on Experian&rsquo;s proprietary model.</li> </ul> <p>It&rsquo;s true that these scores can provide you with a general idea of your creditworthiness, but since they are not widely used, they might not actually tell you how lenders see you.</p> <p>Alternative scores can help you keep tabs on your credit situation and alert you to potential problems, but they can&rsquo;t replace your FICO score.</p> <h2>Where to Get Your Credit Scores</h2> <p>You can buy your FICO score directly from the source at <a rel="nofollow" target="_blank" href="http://myfico.7eer.net/c/27771/93942/2185">myFICO.com</a>, but you can also purchase your FICO score from two of the three major credit bureaus.</p> <p><a href="http://www.wisebread.com/redir/9553233" target="_blank">TransUnion</a> and <a rel="nofollow" target="_blank" href="http://www.wisebread.com/redir/9553232">Equifax each sell a version of the FICO score</a> based on their own information. Each of the three major bureaus also sells a score based on their own models, and you can purchase your VantageScore from each of the bureaus.</p> <p>While it might be worth it to purchase your FICO score, though, it usually isn&rsquo;t worth the cost to purchase a FAKO score. You can usually find these alternative scores for free at web sites like <a rel="nofollow" target="_blank" href="http://quizzle.com/">Quizzle</a>, <a rel="nofollow" target="_blank" href="https://www.creditkarma.com/partner?id=Wisebread">CreditKarma</a>, and <a rel="nofollow" target="_blank" href="http://www.wisebread.com/redir/9553231">CreditSesame</a>. Keep tabs on your situation with free scores, but if you are serious about fixing your credit before applying for a major loan, check your FICO score.</p> <p>It&rsquo;s also important to watch out for those &ldquo;free credit score&rdquo; web sites. First of all, most of them offer FAKO scores, rather than FICO scores. Secondly, you normally have to sign up for a credit monitoring service in order to get your &ldquo;free&rdquo; score. You are much better off going through official channels to get your credit score.</p> <h2>What About a Free FICO Score?</h2> <p>While it&rsquo;s fairly easy to find FAKO scores for free, getting your free FICO score is a little more difficult. (Remember, your FICO&nbsp;score isn't the same thing as your free annual credit report.) For the most part, you will need to pay $19.95 at myFICO in order to see your score. That&rsquo;s $19.95 for one score based on one bureau, so you will have to pay another $19.95 for another score. (Experian charges $15.95 for its non-FICO score.)</p> <p>It is possible to get a free credit score if you have been denied credit or if you don&rsquo;t receive the best possible terms. However, lenders only have to provide you with the credit scoring method used and an explanation of why you were denied credit.</p> <p>A recent law requires lenders to either provide you with the credit score used (so, if it&rsquo;s FICO, you get the FICO score) OR provide you a Risk-Based Pricing Notice. This means that lenders can get around providing you with a free copy of your credit score by analyzing why you didn&rsquo;t get the best rate or why you were turned down.</p> <p>If you want to stay on top of your credit score at all times, you can sign up for <a href="http://myfico.7eer.net/c/27771/93942/2185">Score Watch at MyFICO</a>. They'll send you alerts when there are changes to your credit score and provide you with tools to understand the factors affecting your score. The 1-month trial costs $4.94; each month after that costs $14.95.</p> <h2>Bottom Line</h2> <p>Your credit score is a numerical representation of your creditworthiness. Banks and other lenders use it to make judgments about whether to <a href="http://www.wisebread.com/the-different-types-of-loans-a-primer">approve your loan</a>, and what terms you receive. The most common score used is the FICO score; if you are going to pay for a score, make sure it&rsquo;s that one.</p> <a href="http://www.wisebread.com/fico-vs-fakes-are-you-getting-the-wrong-credit-score" class="sharethis-link" title="FICO vs. Fakes: Are You Getting the Wrong Credit Score?" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/miranda-marquit">Miranda Marquit</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Credit Cards credit score FAKO fico Thu, 20 Dec 2012 11:24:30 +0000 Miranda Marquit 955323 at http://www.wisebread.com Building a Credit History http://www.wisebread.com/building-a-credit-history <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/building-a-credit-history" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/credit-cards-large.jpg" alt="Credit Cards" title="Credit Cards" class="imagecache imagecache-250w" width="250" height="178" /></a> </div> </div> </div> <p>Books on personal finance used to have a chapter on building a credit history, because it used to be harder to do. Young people used to find themselves in a classic chicken-and-egg situation, unable to borrow money without a credit history, but unable to build a credit history without borrowing.</p> <p>Things changed about twenty years ago, when the credit card industry started giving anyone who could scrawl their name a credit card. That's become a little less true since the financial crisis, but only a little.</p> <p>So, it's pretty easy nowadays to build a credit history. Even so, it's worth giving the topic some careful attention, because building a <em>good</em> credit history can save you a lot of money over the course of your life. (See also: <a href="http://www.wisebread.com/how-debt-fools-people">How Debt Fools People</a>)</p> <h2>How to Build Your Credit History</h2> <p>The procedure is easy. There are three steps:</p> <ol> <li>Borrow money</li> <li>Make payments on time</li> <li>Make the last payment a little early</li> </ol> <p>As I say, that first step used to be tricky, back when lenders insisted that their borrowers be credit worthy. Nowadays, it's not so tough.</p> <p>Don't just skip to the last step, though. You might imagine that you could just borrow some money, then pay it back, and you'd be done. But that's not the sort of credit history that borrowers want. What they really care about (and they care about it more deeply than you might imagine) is that you can <em>make payments on time</em>.</p> <p>They care for two reasons.</p> <p>First, because a proven ability to make the payments turns out to be a very good indicator of your ability to eventually pay the money back, even if you run into problems. (That is, they're not interested in your ability to borrow money, stash it in a bank account for a month, and then pay it back.) They care about your demonstrated ability to be <em>organized enough</em> to <a href="http://www.wisebread.com/manage-your-fixed-expenses">get the payments made</a>. They care about your demonstrated <em>willingness</em> to make the <a href="http://www.wisebread.com/emergency-belt-tightening">little sacrifices</a> needed to make the payments even when there's some glitch in your income or an unexpected expense.</p> <p>Second, that's how they make money. A borrower who pays the money right back is of no particular interest to a lender, because he or she pays much less interest.</p> <p>Making the last payment a little early is no longer as important as it used to be, but it can't hurt. (It was important back in the days when the records were kept on paper &mdash; when an actual person had to look down a row of entries in a ledger to see if your payments had been made on time. Lazy people would just check that you made all the payments, and then check that the loan was paid in full by the due date.)</p> <h2>Building Your Credit Score</h2> <p>Be aware that your credit history is only one piece of minimizing your borrowing costs; you also want a great credit score.</p> <p>Happily, if your credit history shows you can make monthly payments on time, you're most of the way there.</p> <p>The other important factors for your credit score are:</p> <h3>A Longstanding Credit History</h3> <p>If all your debts are new, it hurts your credit score. Solution: <em>Keep your oldest credit card active.</em></p> <h3>Plenty of Available Credit</h3> <p>If your cards are maxed out, it hurts your credit score. Solution: <em>Don't approach the limits on your cards. </em></p> <h3>Few Credit Checks</h3> <p>If your credit history is checked by multiple potential lenders, there's no way for the lenders to tell if you're just shopping around, trying to get the best deal on a loan (fine), or desperately trying to arrange more credit because you're overextended (not fine). Solution: <em>When shopping for additional credit, apply to a small number of lenders, and apply to them all at once.</em></p> <p>A good credit history and a good credit score can save you a huge amount of money on a mortgage and a modest amount of money on a car loan. But remember &mdash; you're just &quot;saving&quot; money compared to what it would cost to borrow if you had a crappy credit history. In actual fact, <em>borrowing costs you money</em>, no matter how good your credit history is. The real way to save money is not to borrow in the first place. That's not to say that credit can't be a <a href="http://www.wisebread.com/good-debt-bad-debt">reasonable choice</a> at certain times &mdash; it's just never the cheapest choice.</p> <a href="http://www.wisebread.com/building-a-credit-history" class="sharethis-link" title="Building a Credit History" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/topic/personal-finance/debt-management">Debt Management articles from Wise Bread</a>.</div></div> Credit Cards Debt Management credit history credit score fico Tue, 24 May 2011 10:00:16 +0000 Philip Brewer 549641 at http://www.wisebread.com How a Solid Credit Score Saves You Money http://www.wisebread.com/how-a-solid-credit-score-saves-you-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-a-solid-credit-score-saves-you-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/iStock_000009122819XSmall_0.jpg" alt="credit history" title="credit history" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>There was a time when I had no real interest in my FICO score. I always thought it was just another number and wasn't sure just how relevant it was to my day to day living. But I was wrong.</p> <p>My FICO credit score has a direct bearing on what kind of interest I can expect to pay on a loan, a mortgage or any other similar product. In fact it also helps lenders decide whether they should even consider me for a loan in the first place. I've also learned how much of an influence your <a href="http://www.wisebread.com/debt/credit-scores">credit score</a> actually has on your chances for landing a job or getting into a new apartment. Many employers and landlords review your credit history carefully before deciding to enter into a working relationship with you.</p> <h3>The Importance of Keeping an Eye on Your Credit</h3> <p>A FICO score is comprised of a few elements, each one is formulated as a percentage of the overall score: these include your payment history, amounts owed, length of credit history, new credit and types of credit used.&nbsp; From what I've studied, my ability to make payments on time or to pay off my debt promptly accounts for a massive 35% of my overall score. That&rsquo;s over a third of my score that can be attributed to my own actions.</p> <p>Here's where it's important to keep watch over your credit rating, whether you do it on your own by ordering your credit reports via <a href="https://www.annualcreditreport.com/cra/index.jsp">AnnualCreditReport.com</a>, or through the use of a paid credit monitoring service. If upon review, you discover that your credit may have taken a hit, you should remedy the situation by first finding out whether you've been on time with your bill payments. Start by working on those things you can control and do what you can to resolve any delinquencies in your financial records. You should realize that avoiding late or missed payments has a significant impact on your credit rating, and ultimately, on your overall financial health. Again, this has a whopping effect on your total FICO score.</p> <h3>The Costs of Poor Credit</h3> <p>There have been times in the past when my FICO score wasn&rsquo;t quite as good as it is now. And I now realize that I probably paid more for things back then than I might have done if I had taken better care of my credit.</p> <p>While your credit score can affect lots of things in life, it has the biggest effect on the costs you incur as a borrower. For example if I'm looking to get approved for a prime credit card and I had a low FICO score, I wouldn't qualify to receive the more attractive terms on this card, and will likely be denied the card altogether. This is the unfortunate consequence of having poor credit, and there are strong reasons why this is the case: the lower your score, the bigger a credit risk you are deemed to be, and therefore, the higher the personal loan interest rates that you are charged.</p> <p>So when it comes to big things like a mortgage or a car loan, you can pay a lot more over time if your credit score is at the low end of the scale. I am now someone who remains vigilant about my credit; when I pay my mortgage each month, I revel in the knowledge that I'm saving hundreds of dollars per month, thanks to excellent loan terms that I've been able to secure successfully.</p> <h3>Get Educated About Credit</h3> <p>While FICO information is readily available out there, not everyone understands it too well. But it's something you should be willing to learn about and to give a bit more priority to. After all, it's not something they readily teach us in school, so a lot of folks have to read up on this on their own, or have a lender teach them the ropes. The irony here is that this kind of information is hardly exciting, but the savings it brings can actually pay you a lot of dividends over time, which <em>should</em> be pretty exciting. This is actually one aspect of finance that can make a huge difference on your financial bottom line, if you remain on top of things.</p> <p>If you find yourself resisting this little bit of financial education, then think of it this way: If you can only invest some time now educating yourself about your own FICO score, finding out what it is and figuring out what you can do to improve it, you can look forward to getting the best deals you can make as a consumer. You can look forward to saving a tremendous amount of money over time.</p> <a href="http://www.wisebread.com/how-a-solid-credit-score-saves-you-money" class="sharethis-link" title="How a Solid Credit Score Saves You Money" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/silicon-valley-blogger">Silicon Valley Blogger</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/topic/personal-finance/debt-management">Debt Management articles from Wise Bread</a>.</div></div> Credit Cards Debt Management credit credit score debt fico Wed, 02 Jun 2010 12:00:05 +0000 Silicon Valley Blogger 110653 at http://www.wisebread.com Credit Scores http://www.wisebread.com/debt/credit-scores <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/debt/credit-scores" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/iStock_000009122819XSmall.jpg" alt="credit history" title="credit history" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>A good credit score can get you good rates on <a href="http://www.wisebread.com/credit-card-guide" title="Credit Card Guide">credit cards</a>, encourage landlords to rent to you, and even help an employer decide to offer you a job. A bad credit score, on the other hand, can significantly reduce your ability to take out a loan, from getting a mortgage to a credit card. Maintaining a good credit score is important, no matter what your financial goals are.</p> <h2>What Is a Credit Score?</h2> <p>Your credit score signifies the kind of credit risk the three main credit-reporting agencies &mdash; <a href="http://www.equifax.com">Equifax</a>, <a href="http://www.experian.com/">Experian</a> and <a href="http://www.transunion.com/">TransUnion</a> &mdash; think you are.</p> <h3>FICO</h3> <p>The number is calculated with a formula developed by <a href="http://www.fico.com" title="FICO homepage">Fair Isaac Corp</a>, which is why your credit score may also be referred to as a FICO score. Fair Isaac uses a variety of information about your credit history, from the length of your credit history to how quickly you repay debts, to determine the risk a lender would face by extending credit to you.</p> <p>But there are other factors your credit score takes into account, such as the amount of credit available to you and the types of credit you use.</p> <h3>Good and Bad Credit Scores</h3> <p>Credit scores range from 300 to 850. In general, you want to keep your score above 700, especially if you're planning to apply for a mortgage, car loan, or another form of credit. The best interest rates and terms are available only to individuals with excellent credit scores, typically considered to be about 760 (very few people actually receive a credit score of 850). An individual with a credit score below 620 would be considered a risk by most lenders and will usually be charged sub-prime interest rates &mdash; if offered credit at all.</p> <h3>Free Credit Report</h3> <p>While you are legally entitled to a free copy of your credit history from each of the three major credit reporting agencies every year, your credit score is not listed on those reports. Typically, you'll be required to pay to access your credit score. (<a href="http://www.wisebread.com/get-free-credit-score-monitoring-with-credit-karma" title="Review of Credit Karma">Credit Karma</a> gives you your credit score for free.) Each of the credit bureaus offers different tools to purchase your credit score, along with their version of a FICO score. There are both options for a one-time purchase and to subscribe to a monthly report. However, your free credit reports can also be useful in understanding your credit score, as well as improving it. You can receive your free copies through <a href="https://www.annualcreditreport.com" title="Official site for free credit reports">AnnualCreditReport.com</a>.</p> <h2>How to Improve Your Credit Score</h2> <p>There are steps you can take to raise your score, but it's worth noting that your credit score won't be immediately improved. It's a process that takes time, which is why it is important to maintain a high score in the long-term, as well as when you're getting ready to get a loan.</p> <p>The most important step you can take is to pay down any balances you have on existing lines of credit. The percentage of your available credit that you use is a determining factor in your credit score and should be below 30 percent if possible. Even if you pay off your balance every month, keeping your spending below that 30 percent mark can help significantly. Paying your bills on time and in full is also crucial to raising your credit score. Even one late payment can drop your score by 100 points &mdash; and late payments can affect your score for seven years.</p> <p>For those individuals with low credit scores who find it difficult to make payments on time and in full, it may be worth consulting a <a href="http://www.wisebread.com/dealing-with-debt-credit-counselors">credit counseling service</a>. Such consultations do not damage credit scores and may help create a strategy that will reduce or eliminate debt &mdash; which in turn improves credit scores.</p> <p>It's also important to limit the number of requests you make for new credit: each credit card application or other request can take off five points. If you don't have a credit history at all, you will need to get a credit card to start with, but try to limit the number of lines of credit you open. Your credit score will remain low until you've built up a solid credit history.</p> <h2>How to Maintain a High Credit Score</h2> <p>If you already have a high credit score, it's important to maintain that score for the future. In general, maintaining your credit score is a matter of common sense: pay your bills on time, keep balances to a minimum, and don't apply for credit you don't need. But because there are so many factors that can affect your credit score, there are a few other techniques to keep in mind that will help you keep your credit score up.</p> <p>While it might seem that having fewer credit cards would improve your credit score, the truth of the matter is that you shouldn't close any credit card accounts, even if you don't routinely charge any purchases to those cards. The length of your credit history is an important factor in your credit score and closing accounts, especially those that have been open for a long time, can reduce your credit history and therefore drop your score. It makes good financial sense to make sure that you don't carry a balance on your credit cards, but to keep accounts active make a purchase with each card once a month or so. Pay it off in full &mdash; after all, you want to have as much credit available as possible.</p> <p>You should also check your credit history on a regular basis. Mistakes can affect your credit score, even if you didn't make them. As long as you look through your credit report on a regular basis, you can identify any errors and request that the credit bureaus address them. While you are only entitled to one free copy of your credit report from each of the three credit bureaus each year, you can choose to stagger when you request your credit report from each agency. For instance, you can request your report from Experian in January, from TransUnion in May and from Equifax in September. That way, you can review your credit history every four months, without paying for extra copies of your credit reports.</p> <a href="http://www.wisebread.com/debt/credit-scores" class="sharethis-link" title="Credit Scores" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/thursday-bram">Thursday Bram</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Consumer Affairs credit report credit scores debt management fico Mon, 04 Jan 2010 19:17:24 +0000 Thursday Bram 6319 at http://www.wisebread.com Credit Scores Across the Country: Which Third are You In? http://www.wisebread.com/credit-scores-across-the-country-which-third-are-you-in <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/credit-scores-across-the-country-which-third-are-you-in" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/creditkarmagif.gif" alt="" title="" class="imagecache imagecache-250w" width="250" height="269" /></a> </div> </div> </div> <p><a href="http://www.wisebread.com/redir/creditkarma">Credit Karma.com</a> recently released a report that concluded about a third of consumer's credit scores have increased (that's good) during a period of October 2008 until January 2009. Suprisingly, one third also took a dive, while the other third remained relatively unchanged. Where do you stand in this U.S. Statistic? And how can you increase your score for free?&nbsp;</p> <p style="margin-bottom: 0in;">Here are the details from the report, obtained from <a href="http://www.wisebread.com/redir/creditkarma">Credit Karma.com</a> (a pro-consumer credit score tracking and management service that has delivered more than 850,000 free credit scores and counts more than 250,000 registered users.) It just announced the launch of it's U.S. Credit Score Climate Report with trend data for January 2009. Here are some of the more interesting points of the report:&nbsp;&nbsp; </p> <ul> <li>&quot;During the October 2008 to January 2009 time period, 37% of consumer credit scores have gone up, 31% have gone down, and 32% remained the same.&nbsp; Of the scores that increased, the average credit score rose 13 points during the time period.&nbsp; Of the scores that decreased, the average credit score dropped 15 points.&nbsp; Here are some additional points revealed in the Report:</li> </ul> <p>&nbsp;</p> <ul> <li>Average credit score with no change is 693 whereas 673 and 662 are the respective credit score averages for those with an increase and decrease. This would suggest that people with higher credit scores maintain more stable credit scores while those with marginal credit scores tend to be in flux. </li> </ul> <p>&nbsp;</p> <ul> <li>Age is one key factor. Younger consumers, age 18-24, saw the biggest increase in their credit scores. This is caused by a few factors. First, younger people have a shorter credit history and therefore lower scores (Average score: 670). As a result, we see a higher percent of younger consumer&rsquo;s credit scores on the increase. Secondly, older consumers, age 65+, tend to have a longer and more stable credit history (Average score: 736)</li> </ul> <p>&nbsp;</p> <ul> <li> Location is another key factor. As states experience economic changes such as massive layoffs, foreclosure, bankruptcy or impacts of the economic stimulus initiatives, credit scores may be impacted. Currently, we don&rsquo;t see major differences between the states highlighted in this report.&rdquo;</li> </ul> <p>&nbsp;</p> <p>&nbsp;</p> <p>Want to know more about Credit Karma and how it works? We interview Ken Lin, CEO of <a href="http://www.wisebread.com/redir/creditkarma">CreditKarma.com</a> tonight on our <a href="http://www.blogtalkradio.com/stations/Elevenmomsradio/WiseBread/2009/02/26/What-is-Your-Credit-Karma">live Blog Talk Radio show</a>! Tune in at 8pm CST to hear how you can get your credit score for free, what actions might help to increase your score, and what you should be doing now to get a handle on future credit opportunities.</p> <p>&nbsp;</p> <p><i>Report data courtesy of <a href="http://www.wisebread.com/redir/creditkarma">CreditKarma.com</a></i></p> <a href="http://www.wisebread.com/credit-scores-across-the-country-which-third-are-you-in" class="sharethis-link" title="Credit Scores Across the Country: Which Third are You In?" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/linsey-knerl">Linsey Knerl</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Personal Finance Consumer Affairs Credit Cards consumer credit credit score creditkarma.com fico Wed, 25 Feb 2009 21:07:59 +0000 Linsey Knerl 2872 at http://www.wisebread.com Get Your Free Credit Score from Credit Karma http://www.wisebread.com/get-free-credit-score-monitoring-with-credit-karma <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/get-free-credit-score-monitoring-with-credit-karma" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/compare.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="117" /></a> </div> </div> </div> <p><a target="_blank" href="https://www.creditkarma.com/partner?id=Wisebread">Credit Karma</a> offers free credit scores to consumers with no strings attached. It is a truly free service: There's nothing to cancel and they don't ask for your credit card number.</p> <p>The sign up process is painless. I was able to receive my free score in less than two minutes.</p> <p>As you can see from the screenshot above, the only &quot;catch&quot; is that under your free credit score report, Credit Karma will show you offers from various companies like Road Runner, Upromise, and Discover. You can organize the offers based on ratings from other Credit Karma users (think of it as a Digg for financial product offers). According to <a target="_blank" href="http://www.usatoday.com/tech/columnist/kimkomando/2008-05-22-web-money_N.htm">USA Today</a>:</p> <blockquote><p> Credit Karma provides you with special offers based on your credit score. For example, you can get a lower interest rate on credit cards. You may also apply for offers from cable companies and other businesses. </p></blockquote> <p><a target="_blank" href="https://www.creditkarma.com/partner?id=Wisebread"><img width="600" height="280" src="http://www.wisebread.com/files/fruganomics/compare.jpg" title="credit karma score example" alt="credit karma score example" /></a></p> <p>There are no annoying pop-up ads and Credit Karma claims it will not sell your information to anyone. The ads are not a bad trade for a free credit score. In comparison, <a target="_blank" href="http://myfico.7eer.net/c/27771/87523/2185?subId1=2425">FICO's official credit score monitoring service costs $14.95 a month</a>.</p> <p><a target="_blank" href="https://www.creditkarma.com/partner?id=Wisebread"><img width="367" height="196" src="http://www.wisebread.com/files/fruganomics/Score.png" alt="credit rating" /></a></p> <p>If you're not familiar with <a href="http://www.wisebread.com/debt/credit-scores" title="Wise Bread's Guide to Credit Scores">how credit scores work</a>, the raw numbers might not be very helpful. This is where Credit Karma's comparison charts come in handy.</p> <p>You can check your credit score for free as many times as you want. Credit Karma will keep track of your scores over time, which can help you identify overall trends in your credit score.</p> <p><img width="459" height="218" src="http://www.wisebread.com/files/fruganomics/cash flow.png" alt="cash flow" /></p> <p><img width="447" height="201" src="http://www.wisebread.com/files/fruganomics/money spending.png" alt="money spending" /></p> <p><strong>What information do I have to provide?</strong></p> <p>You have to verify your identity by providing your address, phone number, and social security number.</p> <p>In order to verify your identity with TransUnion, Credit Karma requires standard personal information that anyone would need to access your credit report, including your address, date of birth, and social security number. Since they realize that providing such confidential information may make some people uneasy, they&rsquo;ve put many security measures in place to ensure your safety.</p> <p><strong>Is it safe?</strong></p> <p>Yes. Credit Karma is committed to protecting your information. They have a variety of security precautions in place, including encryption, monitored servers, firewalls, read-only access, and more. More importantly, they won&rsquo;t share your information without your explicit permission. You can learn more about their TRUSTe-certified privacy policy <a target="_blank" href="https://www.creditkarma.com/about/privacy">here</a>.</p> <p><strong>Does checking my score negatively affect my credit?</strong></p> <p>Checking your score with Credit Karma won&rsquo;t lower your score. Since they&rsquo;re making the credit score request on your behalf, these inquiries aren&rsquo;t shown to creditors and don&rsquo;t affect your credit at all.</p> <p><strong>How can this be free? Are they going to sell you anything?</strong></p> <p>Credit Karma is ad-supported. However, they&rsquo;re not the pop-up ads that you might be picturing. Instead, Credit Karma provides targeted offers they think might be helpful to you based on your current financial situation. You&rsquo;re not obligated to take advantage of these offers to continue using Credit Karma, and can even opt-out of receiving email offers.</p> <p><strong>Is this my FICO score?</strong></p> <p>The scores Credit Karma provide are real scores straight from TransUnion. However, they are not FICO scores. Because you have so many different scores (there dozens of FICO scores alone!), the type of score, or even the number you get isn&rsquo;t that important&mdash;what matters is the changes that you observe over time in a single score, and where that number puts you in relation to other consumers. You can learn more about the scores Credit Karma provides <a target="_blank" href="https://www.creditkarma.com/article/guide-to-credit-karma-credit-scores">here</a>.</p> <p><strong>Can I trust the people behind Credit Karma?</strong></p> <p>Yes. Credit Karma is an honest company whose mission is simply to provide financial information and tools to everyone free of charge. They&rsquo;ve provided scores to millions of members and are continually growing and improving its service. They have an A rating from the BBB, are certified by <a target="_blank" href="https://privacy.truste.com/privacy-seal/Credit-Karma/validation?rid=397b697b-5c32-4826-828c-0b36aee9fb6c">TRUSTe</a>, and have been featured on <a target="_blank" href="blogs.wsj.com/digits/2010/02/12/sites-that-help-you-fight-the-fees/">The Wall Street Journal</a>, <a target="_blank" href="usatoday30.usatoday.com/money/perfi/columnist/block/2009-12-21-credit-profile_N.htm">USA Today</a>, <a target="_blank" href="finance.fortune.cnn.com/2012/01/03/the-end-of-paid-credit-report-monitoring/">CNN</a>, and a <a target="_blank" href="https://www.creditkarma.com/about/press">multitude of other sites</a>.</p> <p><strong>Are there other ways to get free credit scores?</strong></p> <p>Yes, here are some options:</p> <ul> <li><a target="_blank" href="http://www.wisebread.com/redir/creditsesame">Credit Sesame</a></li> <li><a target="_blank" href="https://www.annualcreditreport.com">AnnualCreditReport.com</a></li> </ul> <p><strong>More information about Credit Karma and credit scores:</strong></p> <ul> <li><a target="_blank" href="https://www.creditkarma.com/article/guide-to-credit-karma-credit-scores">A Guide to Credit Karma&rsquo;s Free Credit Scores</a></li> <li>Discussions about Credit Karma at <a href="http://forums.slickdeals.net/showthread.php?t=745830">Slick Deals</a> and <a target="_blank" href="http://www.fatwallet.com/forums/finance/804336/?start=80">Fat Wallet</a>.</li> <li>Nora's comprehensive guide to <a target="_blank" href="http://www.wisebread.com/the-four-cs-of-applying-for-and-managing-your-credit">applying for and managing your credit</a>.</li> </ul> <p><strong><a target="_blank" href="https://www.creditkarma.com/partner?id=Wisebread">Click here to sign up at Credit Karma now</a></strong></p> <a href="http://www.wisebread.com/get-free-credit-score-monitoring-with-credit-karma" class="sharethis-link" title="Get Your Free Credit Score from Credit Karma" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/will-chen">Will Chen</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Credit Cards credit karma credit scores fico TransUnion Mon, 15 Sep 2008 14:04:21 +0000 Will Chen 2425 at http://www.wisebread.com The Four C's of Applying for and Managing your Credit http://www.wisebread.com/the-four-cs-of-applying-for-and-managing-your-credit <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-four-cs-of-applying-for-and-managing-your-credit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://www.wisebread.com/files/fruganomics/imagecache/250w/blog-images/three%20cs%20of%20applying.JPG" alt="C" title="C" class="imagecache imagecache-250w" width="250" height="165" /></a> </div> </div> </div> <p class="MsoPlainText">There are Four C's that come into play when you apply for loans and other forms of credit. <span>Along with the obvious &quot;<strong>Credit score</strong>&quot; check, attention is given to three other C's of eligibility: <strong>Capacity, Collateral, and Character</strong>. </span></p> <p class="MsoPlainText">Read on for some hints on how to excel at the four C's, as well as determine and <a title="Wise Bread's Guide to Credit Scores" href="http://www.wisebread.com/debt/credit-scores">improve upon your credit score</a>.</p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>In granting you the ability to buy things on credit, the issuer needs to ensure that you will repay the loan or revolving credit charges. To do this they first examine the &quot;three C's&quot;.</span></p> <h2><span>Capacity</span></h2> <p class="MsoPlainText"><span>You may have the best of intentions to repay a loan, but if you don't have the capacity to do so given your income and expenses, you are dead in the water. They will look at your income, how long you've been at your job, and what the job prospects are in the industry you work in.</span></p> <p class="MsoPlainText"><span><strong>CREDIT APPLICATION HINT:</strong> Make your job sound stable. I have a friend who is an internationally certified and renowned red seal chef at a premier golf course, earning a pretty penny I might add. But when he applied for credit he was rejected because he said it's just a temporary position since golf courses in his area only operate during summer months. He omitted the fact that he had a job waiting for him as soon as the golf course closed down for the summer, and the marketability for his skills is great. But all the credit company saw was a summer job which reduced his capacity to make payments and he was turned down. </span></p> <p class="MsoPlainText"><span>So, make sure that without lying, you paint your job and industry in a favourable light. Are you a &quot;secretary&quot; or &quot;executive assistant&quot;, or even &quot;office manager&quot;? Freelancers will have the hardest time painting a picture of employment stability, but it can be done honestly and effectively.</span></p> <p class="MsoPlainText"><span>As part of your capacity examination, creditors will also look at any existing loans or credit cards you have, along with your payment histories. <em>If you have too much credit available</em> <em>you may be denied</em> even if you don't have a penny charged to your other cards. They want to know that if you max everything out you still have a chance of paying it all off. </span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>Collateral</span></h2> <p class="MsoPlainText"><span>What can creditors take from you if push comes to shove and you can't make payments? It's a yucky way of looking at things, but collateral like non-registered investments and real estate will increase your chances of getting credit easily. </span></p> <p><span> </span></p> <h2><span>Character</span></h2> <p class="MsoPlainText"><span>Although a credit application is a lousy judge of personality, there are objective ways for creditors to get a sense of your financial character, like the following:</span></p> <ul> <li><span>Length of residency at your current location</span></li> <li><span>Length of your employment</span></li> <li><span>Whether you rent or own your home (you're more likely to stay in one place if you own)</span></li> <li><span>Whether you have chequing and savings accounts</span></li> </ul> <p class="MsoPlainText"><span> </span></p> <h2><span>Credit Score</span></h2> <p class="MsoPlainText"><span>The Big C in the four C's is of course your Credit Score. It is instrumental and examined when you need new credit, ask for (or automatically receive) limit increases, rent apartments, and pay deposits on utilities and big ticket items. </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span><strong>Fair Isaac and Company (FICO)</strong> is one of the most used and well-regarded credit score companies around, and often the one used by creditors evaluating your application. Scores range from the low 300s to highs of about 900. A score above 750 is generally considered to be very good. </span></p> <p class="MsoPlainText"><span>Following are the <em>factors FICO takes into account</em> in calculating your score: </span></p> <ul> <li><span><strong>Payment history</strong> (about 35% of the score). They are looking for punctual payments with no incidences. </span></li> <li><span><strong>What you already owe on credit accounts </strong>(about 30%). They look at all credit available to you and what the balances are. They may see large numbers of credit balances as a negative, even if you are paying them all off effectively, so beware of juggling too many loans. </span></li> <li><span><strong>Length of your credit history </strong>(about 15%). The longer the history, the better. </span></li> <li><span><strong>Your new credit </strong>(about 10%). If you opened up a series of credit accounts recently, alarm bells will go off. </span></li> <li><span><strong>Types of credit </strong>(about 10%). Ideally you will have a decent mix of different credit accounts (credit cards, lines of credit, mortgages, etc). Being over-weighted in one type of credit may be a negative. Although it makes up 10% of your score, it only really weighs in if there is a lack of information to go by in the other categories. </span></li> </ul> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>You are then compared statistically to the average person with a similar profile to yours. Points are awarded for each factor and it all comes out with a magic number that helps creditors figure out who is most likely to repay their debts. (<a title="Wise Bread's Guide to Credit Scores" href="http://www.wisebread.com/debt/credit-scores">Learn more about credit scores.</a>)</span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>Rate Shopping and Score Inquiries</span></h2> <p class="MsoPlainText"><span>Every time you approach a mortgage lender or look for an auto loan, they will do a credit report search in order to let you know what interest rate and loan terms they are willing to offer. There is a common notion that every time your credit score is inquired, it reduces your overall score or appears on your report in a way that is unfavourable to lenders. </span></p> <p class="MsoPlainText"><span>According to FICO, <strong>they do not penalize customers who rate shop</strong>. However, they do suggest that if you are to rate shop, that you do it in a space of about two weeks so that your report shows an obvious history of rate shopping. </span></p> <p><span> </span></p> <h2>Reviewing your Credit Report</h2> <p class="MsoPlainText"><span>It is widely suggested that you review your own credit report once a year, as it is not uncommon for improper filings and reports to appear on it. For example, if you have a dispute with a merchant and <a target="_blank" href="/i-got-duped-dealing-with-credit-card-and-merchant-disputes">withhold your credit card payment</a> (which you are legally entitled to do), you may discover that the credit card company negligently filed an outstanding payment report. Too many of these miscellaneous mistakes can contribute to a poorer score than you deserve, and you can take measures to correct them if you review your credit report.</span></p> <p>You are entitled to one free copy of your credit report every year, and a good place to get it is <a target="_blank" href="http://www.annualcreditreport.com">here</a>. Beware of some of the extra services offered which will cost you: they are usually unnecessary.</p> <p>&nbsp;</p> <h2><span>Ways to Improve Your Credit Score</span></h2> <p class="MsoPlainText"><span>FICO offers the following tips:</span></p> <ul> <li><span>Pay your bills on time</span></li> <li><span>Make up missed payments</span></li> <li><span>Keep low balances on credit cards and lines of credit</span></li> <li><span>Pay off debt completely instead of transferring to other accounts (like doing a balance transfer to a card offering a low teaser rate)</span></li> <li><span>Don't close credit card accounts just to raise your credit score (it may be perceived as a lack of discipline to keep an account open and not abuse it)</span></li> <li><span>Don't get new credit cards just to increase credit available to you (ideally you have other emergency measures than credit cards)</span></li> </ul> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>For more information on FICO and understanding your score, visit their website <a target="_blank" href="http://www.myfico.com">here</a>. </span></p> <p class="MsoPlainText"><span> </span></p> <a href="http://www.wisebread.com/the-four-cs-of-applying-for-and-managing-your-credit" class="sharethis-link" title="The Four C&#039;s of Applying for and Managing your Credit" rel="nofollow">ShareThis</a><br /><div id="custom_wisebread_footer"><div id="rss_tagline">Written by <a href="http://www.wisebread.com/nora-dunn">Nora Dunn</a> and published on <a href="http://www.wisebread.com/">Wise Bread</a>. Read more <a href="http://www.wisebread.com/taxonomy/term/"> articles from Wise Bread</a>.</div></div> Credit Cards capacity character collateral credit applications credit score fico loan applications rate shopping Thu, 03 Jan 2008 23:27:52 +0000 Nora Dunn 1585 at http://www.wisebread.com