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Credit Score Killers

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November 17, 2013 by Bankinfl


credit score killers

NEW YORK (CNNMoney) Your credit score can make or break your financial future. Not only is it used to determine whether you’re creditworthy enough to open a credit card, land a mortgage, rent an apartment or get an auto loan, but it also plays a big factor in the interest rate you qualify for. There are multiple credit scores out there, but the most common is your FICO score , which ranges from 300 to 850. A score of 780 or above is considered excellent and will land you the top deals available, while a 720 to 780 is strong but may not qualify you for the best rates, says John Ulzheimer, president of consumer education at A 680 to 720 means you’re likely to get approved for credit but not likely to qualify for the most favorable rates, while having a 680 or lower will make it hard to get approved for credit at all, and any credit you do get will come with sky-high interest rates.
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How your FICO credit score is calculated: Length of credit history

“The minimum amount of credit history needed to generate a FICO score is six months or more on at least one credit account,” says Paperno. “There also has to be at least one undisputed account reported to the credit reporting agency within the past six months to generate a FICO score. These scoring requirements can be met by a single account or multiple accounts.” That means a consumer who opened her first credit card three months ago — and had no other loans — would not yet have a FICO score, regardless of how responsible she has been with that card. Although accounts don’t need to be open, they do need to still appear on your credit reportto be counted by FICO.So even if an account was closed five years ago, for example, its continued appearance on a credit report would help extend a borrower’s length of credit. Those closed accounts won’t appear indefinitely, however: Closed accounts that were always paid on time remain on credit reports for 10 years from the date of closure or last account update, while accounts with late payments remain for seven years from the date of first delinquency. That means if you haven’t used credit in years, you may not have a FICO score. Alison O.
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Should Credit Scores Include Rental History?

The bill proposed by Reps. Keith Ellison (D-Minn.) and Mike Fitzpatrick (R-Pa.), discussed in a June piece for The Hill, would explicitly allow credit reporting agencies to factor in data on utility and rental payments gleaned from telecom companies and property managers. The hope is that many who haven’t taken out much debt, or those who’d get a boost in their scores by including on-time payments, will gain access to loans they were previously not considered for. “In passing this commonsense legislation America would catch up to the more than two dozen other nations that have embraced alternative data as an efficient and equitable approach to extend credit to increase families’ financial standing and to grow the economy,” write Ellison and Fitzpatrick, who wish to see “positive” financial transactions appreciated, not just the negative . As The Wall Street Journal’s AnnaMaria Andriotis notes , not everyone is enthusiastic about the idea for including “alternative” or non-loan payments in credit scores. Some say many so-called “credit invisibles” are better off remaining unseen by the likes of Equifax and other credit bureaus.
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