■ Assets: What is owned
- Monetary Assets- liquid asset, e.g., cash, checking and savings accounts, CD's
- Tangible Assets- e.g. vehicles, computers, your home (use fair market/garage
- Investment Assets-capital assets, e.g., corporate stocks, mutual funds, gold (can be
tangible or intangible items)
Fair market value: Price you would receive if sold now. (Not the price you paid.)
- Inquiries: Number of recent inquiries(12 months)
- New accounts— number of trade lines opened in last year
- Inquiries that are considered:
- Credit card, mortgage, auto loan, etc.
- Inquiries that are not considered:
- Consumer inquiry, lender promotions(e.g., pre-approved credit card offers), account review by lender, employment consideration, insurance
- Mortgage, Auto and Student Loan inquiries are combined to reflect rate shopping
- Mortgage/Auto/Student Loan 30-Day Buffer - all mortgage/auto inquiries occurring in the most recent 30-day period are ignored
- Mortgage/Auto /Student Loan 45-Day Deduplication - within any 45-day period (prior to most recent 30 days), all mortgage/auto inquiries are counted as one inquiry
Information NOTIncluded in a FICO score- These variables may still be considered when a lender reviews a loan application
We went over the component of FICO score. This information may differ slightly from other score, Vantage score. However, we reviewed the most dominant provider in the market, FICO score.
Credit Score is only based on credit use. Personal information, employment information, interest rates, assets are not considered. Also, your other payment history such as payment to the landlord, utility companies, and others usually are not counted. Some cell phone companies report to bureaus but not necessarily. Therefore, if you don't have credit history, you don't have a score
Tips for Improving Credit Score
1) Check your credit report to see if the information is correct. Correct errors if there is any.
2) Start building your credit history. Get a credit account (authorized user of parents' credit card, secured credit card, bank card)
3) Pay your bills consistently and on time. If you have credit account such as installment loans, credit cards, consumer loans, and other loans that your creditors report, never be late for those payments. You pay for penalty fee and penalty interest but also pay for lower credit score.
4) Use the card wisely but keep the balance low. Account activity is important, meaning you need to use credit but you need to keep reasonable amounts of unused credit. Approaching the credit limit of credit card lowers your credit score severely.
5) Don't open credit card accounts that you don't need. You need to have some credit to build your credit history. Too many credit cards will hurt your credit score.
6) Apply for credit sparingly to limit credit inquiries. When you apply for credits, potential creditors will check your credit report, which are hard inquiries and lower your credit. Forget about store cards to get 15% discount. But also watch out for sweepstakes, cellphone, utility companies, landlords who may check your credit report.
7) Start to pay off debt rather than moving it around. If you have a credit card with balance, start to pay off your debt instead of move balances to other credit cards that may have lower interest rate.
8) Watch out for your student loan. Student loan will be considered more in credit score in the future. Defaulting the student loan, meaning that you did not make the payments is a problem as of now but it will be considered fore in the future.
9) Shop for a loan within a focused period of time.
10) Don't close old credit cards: old accounts can help your score.
Identity (ID) theft occurs when someone uses your personal identification
information, like your name, address, telephone number, driver's license number, birth
date, bank account number, Social Security number or credit card number, to commit
fraud or other crimes. The crime takes many forms. An ID thief can do many things in
a victim's name, from using an existing credit card account to opening new accounts,
taking out an auto loan, getting medical services, or even committing a crime resulting
in a criminal record. An ID thief can use your personal information to rent an
apartment, open a bank account, apply for benefits, obtain employment, or establish
cell phone or utility service in your name. You may not find out about the theft until
you review your credit or specialty consumer reports or a credit card statement and
notice charges you didn't make—or you're contacted by a debt collector.
Companies will also still be able to offer you prescreened credit (unsolicited credit offers you receive in the mail). And, according to the FTC, in some states potential employers, insurance companies, landlords, and other non-creditors can still get access to your credit report with a credit freeze in place. If you're married, both you and your spouse must freeze your separate credit files to fully protect your household. In most states it will cost you no more than $60 ($10 per report per person). However, in certain states a couple's cost could be as high as $120 (six reports at $20 each) if they are not eligible for a no-cost freeze. After processing your request, each agency will mail you a confirmation letter and a PIN or password that you will use whenever you temporarily lift the freeze, and if you permanently remove it. In many states, you can choose to lift the freeze for a specific period of time or for a particular creditor or other credit report user. If you temporarily lift the freeze for a particular third party, you will provide a unique access code (TransUnion and Equifax) or your PIN (Experian) to that person or business so that they can access your credit report.