Sunday, December 16, 2012

FICO data a la Dawn Thomas

Want to know what makes a great credit score? FICO will tell you!-Conclusion

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by The Dawn Thomas Team on December 14, 2012
Now with the conclusion of our two part story, What Makes a Great Credit Score: The Dawn Thomas Team has been emphasizing recently, for both Buyers and Sellers, the importance of not only knowing your financial status, taking control of your finances but also taking advantage of the low interest rates. However something that makes all of this a bit easier is your credit score, the higher the better, which is calculated by FICO. Recently Inman news released an article with FICO’s findings: when people have high and consistent credit scores, what do you they do that the rest of us don’t? Read on and learn how to have an envious credit score!
“Because payment history makes up the biggest chunk of how a person’s FICO score is calculated — 35 percent — managing credit responsibly over time plays a large part towards improving one’s credit score, FICO said. This includes paying at least the minimum amount on all credit cards every month, the company added. ”Missing payments will lower a person’s FICO score, but if that happens, establishing or re-establishing a good track record of making payments on time will generally improve a person’s score,” said Anthony Sprauve, credit score adviser for myFICO, the company’s consumer division, in a statement.
By law, most negative information, including missed payments, is removed from credit reports after seven years. This does not apply to tax liens or Chapter 7 bankruptcy. About 1 in 100 high achievers had a collection on their credit report, and about 1 in 9,000 had a tax lien or bankruptcy. ”While people with a high FICO score are not perfect, their consistently responsible financial behavior usually pays off over time,” Sprauve said. “In a challenging economic period, the fact that we all have a chance to be high achievers is very good news. The lesson from these high achievers is that it’s never too late to rebuild and score high.”
FICO high achievers typically have long, well-established credit histories and rarely open new accounts, FICO said. They opened their oldest credit account 25 years ago, on average, and their most recent credit account more than two years (28 months) ago. In general, their average credit account is 11 years old. Their balances are often low and they use only an average of 7 percent of their available revolving credit, i.e., $70 on a credit card with a $1,000 maximum.
FICO considers both positive and negative credit report information within five general categories, the company said: payment history, amounts owed, length of credit history, new credit, and types of credit used. The FICO score does not take into account attributes such as race, gender, age, marital status, salary, employment history or address, the company said. FICO’s consumer website, myFICO.com, offers tips and tools to help people make decisions about their credit. ”Because a high FICO score is typically achieved over time and takes into account dozens of variables, there are no ‘quick fixes’ for rapidly improving scores or repairing bad credit,” Sprauve said.
“Practicing good credit behavior consistently over time and regularly checking your credit report for errors can be instrumental for achieving a high credit score, which can lead to better loan terms and lower interest rates. Achieving good credit health is a long-distance event, not a sprint.’ ”
This blog is courtesy of The Dawn Thomas Team who is an award-winning Real Estate Agent team at Intero Real Estate Services in Los Altos 650-701-7822. We help nice people with selling and buying homes from Palo Alto to West San Jose

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