YOUR CREDIT SCORE

A credit score is a number that signals lenders whether you qualify for a loan, what interest rate to charge and how large the loan can be.  Generally credit scores range from 300 to 850, with 850 being perfect credit.  Your score is determined by looking at your financial history.   

Payment History = 35% of Your Credit Score
How long ago were late on your payments?  Often or once in a while?  Paying bills on time will increase your score.  Some things that will lower your score are court judgments, tax liens or bankruptcy.

Amount Owed (Balances) = 30% of Your Credit Score.
Balances are the amounts you currently owe.  Balances on revolving charge accounts such as Visa/MasterCard carry more weight than high balances on installment loans.  For example, if you have charges more than 50% of your credit limit, your score will go down at least 100 points.  If you regularly stay under 10% of your limit, you earn more points than if you paid it off completely.

Length of Credit History = 15% of Your Credit Score
How long have you used credit?  Thirty years is considered excellent.  Having three to five lines of credit is best.

Types of Credit = 10% of Your Credit Score
How many open and closed lines of credit do you have?  Payments made through a finance company lower your credit score.

Inquiries About Your Credit Score = 10%
A Credit Inquiry shows up on your credit report when a business with a legitimate purpose has requested your credit report.  The only ones that count towards your score are related to your applications for new credit.  Someone with a short length of credit history will get 30 points deducted off their score while someone with a longer credit history will get only 10 points deducted and will be allowed more inquiries.
Your score will not be affected by your own credit report requests or promotional inquiries.

Three Things You Need to Obtain a Credit Score
One line of credit at for at least six months
One line of credit on which you have made payment in the last six months
A legitimate social security number that is not associated with fraud, identity theft or a terrorist list

How do I Build Good Credit Fast?
Open up a secured line of credit or obtain a credit card with your bank.

Credit Facts
The median credit score in the United States is 720.
Only 1% of population has a score of less than 500
15% of the population has a score of 790 or greater.

Free Credit Report
In order to protect consumers against identity theft, consumers in the Western United States are entitled to one free credit report each year from each of the nationwide consumer credit reporting companies: Equifax, Trans Union, and Experian.

There are three ways to request your free report, via the internet, by telephone, or by mail.  The website to use is www.annualcreditreport.com .  At this site you can enter your personal information and answer a few security questions that verify your identity.  The site will then direct you to the credit reporting companies.  The report is available for your viewing right away, and can be printed out.  You can also download a form to request your reports by mail.  You only need to send one form to a centralized address; there is no need to send the form to each of the credit bureaus.

The report however does not contain your credit score.  The credit reporting companies offer your score for a fee of about $4 to $6. The toll free telephone number to call to request your report is (877) 322-8228.  This is an automated process and you don’t get to speak with a live person.  You answer questions when prompted to verify your identity and the report is mailed to your home address.