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Credit Advisory Services 2019: Ken Strey

This document provides information about factors that affect credit scores. It discusses the following key points in 3 sentences: The highest possible credit score is 850, while scores from 700-749 indicate low risk. Payment history, amount of debt, credit history length, new credit, and different credit types each account for 10-35% of a credit score. Banks, employers and insurers use credit scores to assess risk, with those in the 700-749 range having on average a 5% delinquency rate in the next two years.

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41 views9 pages

Credit Advisory Services 2019: Ken Strey

This document provides information about factors that affect credit scores. It discusses the following key points in 3 sentences: The highest possible credit score is 850, while scores from 700-749 indicate low risk. Payment history, amount of debt, credit history length, new credit, and different credit types each account for 10-35% of a credit score. Banks, employers and insurers use credit scores to assess risk, with those in the 700-749 range having on average a 5% delinquency rate in the next two years.

Uploaded by

ken
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Ken Strey

www.scorewellinc.com
[email protected]

925-478-5213

2019 Credit Advisory Services


Credit Score Grade
850 is the highest
770 The Ultimate Goal A++
740 to 769 A+
720 to 740 A Low Risk
700 to 719 A-
680 to 699 B+
660 to 679 B
640 to 659 B- Medium Risk
620 to 639 C+
600 to 619 C
580 to 599 D
579 and below F
High Risk

Your Credit Experts


How Banks, Employers and
Insurance Companies Assess Risk

As a group, the consumers in the 700-749 range, have a delinquency rate


of 5%. This means that for every 100 borrowers in this range,
approximately 5 will default on the loan, file for bankruptcy, or fall 90 days
past due on at least one credit account in the next two years.

Your Credit Experts


What Information Creates
Your FICO Score?
35%

30% Payment History


Amount of Debt
Credit History
New Credit
Types of Credit

10%

15%
10%

Your Credit Experts


Payment History 35%
Remain current on paying all your monthly bills. 35%

30%

LATE PAYMENTS: 10%


15%
ANY new late payments, collections, or bad-debt charge offs of 10%

any type will lower your score as much as 100 points. Even one
new 30 day late payment of $5 can cost you the loan you want and the credit
score you deserve. In fact the lower the minimum payment that is due, the
further your score will drop. As it assumes if you cannot make a $5 payment you
are in serious jeopardy and the score will then dramatically drop

Your Credit Experts


Amount of Debt 30%
30% Rule on Credit Card Balances
35%
Look at your credit card limit; subtract 70% from the credit 30%

limit amount. This will equal 30% of available credit. Never


charge greater than this amount. 10%
15%
10%

Example: $1,000 limit – 70% = $300 (30%)


Creditors report information to the credit bureaus every 30-90 days and in most
cases in the middle of the month when most people have larger balances. They do
not report what you have paid that month, but rather what your current balance is
during the middle of the month as they upload the tapes. Thus driving your score
down
Note: Ideally, pay off your credit cards to a $10.00 balance each month. Never charge
greater than 30% of your available credit.

Your Credit Experts


Length of Credit History 15%
The longer your revolving accounts (credit cards) have been
open & active the better your score will be.
35%

30%

DO NOT CLOSE CREDIT CARDS:


10%

That have 2 + years of history. This will cause you to lose all the good 10%
15%

history you have built on those credit cards. Instead keep the card open
& only charge a $5 purchase once every 5 months to keep the account active.
(Credit Cards go “Inactive” after 6 mo. which will lower your score.)

INACTIVE CREDIT CARDS:


Any open credit cards with a zero balance and that has not been used for more than 6
months, is considered an “Inactive” account, and will typically lower your score.

Your Credit Experts


New Credit 10%
New Open Accounts – lower your score for 12 months
New Inquiries – can lower your score an avg. 5 to 22 points 35%
30%

10%
15%
10%
NEW OPEN ACCOUNTS:
In most cases, opening a new account of any type will lower
your score. Do not open any new accounts (even cell phone & cable) unless
absolutely necessary and please consult with your Scorewell Client Manager first.
Choose your accounts wisely.
NEW INQUIRIES:
New Inquiries can lower your score an average of 5 - 22 points Your points will
be returned within 90 days of each inquiry. ( unless a account is opened )

Your Credit Experts


TYPES OF CREDIT 10%
Hierarchy of the types of credit
35%
30%

DIFFERENT CREDIT TYPES:


• Mortgage – have the greatest amount of weight 10%
10%
15%

• Auto Loans
• Bank Credit Cards
• Store Credit Cards
• Other Installment Loans, such as student loans – have the least amount of
weight
A mortgage loan carries more positive points after being opened for greater
than 12 months compared to any other types of credit.

Your Credit Experts

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