Credit Score aka Fico Score

Discussion in 'Credit Talk' started by Surphie, May 27, 2001.

  1. Surphie

    Surphie Well-Known Member

    I was surfing the net and came across this article at What do you think?


    Fico score thresholds:
    range from 300 to 900 points
    300 to 619 Very bad
    620 to 679 Not very good, minimum needed to qualify at most lenders.
    680 to 699 Good but no special discounts available.
    700 to 719 A few lenders offer easier approval.
    720 to 749 This is where discounted rates are offered by some lenders.
    750 to 775 Hard to get this high. Need this to get the best loans.
    776 to 815 Almost impossible to get this high. Try climbing Mt. Everest instead!
    816 to 900 We've never seen a score this high.

    Ways To Improve Credit Score:
    * Close out excessive cards
     Close out unneeded credit cards, keeping only five (Visa or Mastercard) cards, and those five should be the ones that you have had for the longest time.  However, if you have had department store cards for a long time keep some of them. You want to show that you have credit history that goes back for a long time and also that you have minimal ability to create future debt, but also show that you have five lenders that you can borrow from, (but don't use credit cards). 

    * Avoid dormant status
     A tiny use of credit card, say one purchase a year, with immediate payoff is good, because failure to use a card for more than two years will cause credit scoring software to assume that this is a dormant account. Put your credit cards in a safe deposit box and don't use them for three months. Credit scoring is based on looking back for several months, so you need to wait at least three months ( or even 12 months) after paying off debt to get a better credit score. 

    * Avoid "recent use" label
    If paying off collection account, this will trigger "recent activity" on credit report, which will hurt your credit score, so pay off collection account at close of escrow rather than as part of the initial loan application. A dormant unpaid collection account is better than a recently paid off collection account because of the "recent use" factor!

    * Avoid debt from finance companies
    Debt from finance companies is presumed to be for people with bad credit, so a loan from a finance company can hurt credit score. A finance company is a company that makes unsecured loan to consumers but is not a Visa card, Mastercard, or American Express or bank card type of company. A department store charge card is not a finance company debt.

    * Demand proper classification of debt
    Home equity loans should be classified on credit report as a "real estate installment loan", not as a "revolving debt". Revolving debt is what hurts a credit score. "Revolving debt" is a loan or line of credit or credit card where you can increase or decrease the balance at your discretion. If your home equity loan is misclassified call your lender and tell them to report to credit bureau as a real estate installment loan.

    * Pay annual card fees early
    The annual fee on your card is a charge that can hurt your credit score by a tiny amount, so pay it in advance. just keep a logbook for each credit card showing the anniversary, the fees, etc. and mail the payment in one month early. 

    * Establish a season to apply for credit card debt
    When applying for cards try to only apply for a card during the same month of the year, say in October. This way credit inquiries will only pull down your score for 90 days after October. This means that if you try to buy a home in the spring time those inquiries will not count, since they occurred more than 90 days ago.

    * Minimize balances on credit cards
    If you can't payoff credit cards the solution is to get a cash-out refinance line of credit on your home or borrow from your 401K. Getting just one extra home loan does not hurt your credit score as much as carrying lots of credit card debt. 
         If you have debt that you must continue to carry on a credit card do not use more than 30% of the maximum that each card allows. For example, if you have  $ 5,000 debt balance on one card that has a maximum charge limit of $ 5,000 then move some of the debt to other cards so that only a small amount of the charge limit is being used on each card.
        Absolutely payoff all credit cards in full at end of monthly billing cycle. Refuse new credit cards or credit line increases. Refuse to open any new department store charge cards or installment purchase agreements, etc. (or deferred payment plans). Pay alimony and child support on time, if these payments are late they may show up on credit report. Do not apply for cellular phone service or any service that requires a credit check. This includes test driving cars, as the dealers may secretly check your credit without your permission.

         Please remember that if you payoff a loan balance it takes a month to have the credit bureau change their records. (This is unfair because if you charge up debt the credit bureau immediately reflects that you have more debt! As you can see, the credit reporting system is for the benefit of the lender, not for the benefit of the borrower).

    GEORGE Well-Known Member


  3. Surphie

    Surphie Well-Known Member

    Thanks for you reply, George. I hope I did not bore you too much

    best regards,
  4. Doug

    Doug Well-Known Member

    George hit the nail on the head, SCORE really rises when balances are reduced. 744 with 33 accounts, only 4 are closed. Way too many accounts according to FICO. My question would be where does the Balances need to be to reflect in raising your score. Every time I do an analysis report, it always saids too high of balances lowering your score.

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