Understanding Your Credit

What is a FICO score?

A credit bureau score measures the relative degree of risk a potential borrower represents to the lender or investor. The bureaus rely exclusively on their own data for calculating scores. The credit bureaus and their respective models are:

• Equifax (formerly CBI) / Beacon model
• Trans Union / Emperica model
• Experian (formerly TRW) / FICO model

A credit score attempts to condense a borrowers credit history into a single number. FICO scores vary from approximately 375 to 900 points. Generally, the higher your credit score, the better the interest rate you will be able to obtain. We have loan programs available to suit a wide range of credit scores.

How is a FICO score calculated?

Reason codes are included in credit reports and help explain why a credit report scored as it did, the weight given to factors making up the score, and where a consumer should direct their efforts  toward increasing their score. The reason codes and their respective weights are:

• Late Payments, Collections, Bankruptcies - 35%
• Outstanding Debt - 30%
• Length of Credit History - 15%
• Types of Credit - 10%
• Inquiries (Applications for new credit) - 10%

How can I increase my score?

• Pay your bills on time. Late payments and collections can have a serious impact on your score. Note that late payments, collections and bankruptcies are the most heavily weighted of the reason codes.
• Reduce your credit card balances. If you consistently have high balances on your credit cards, your score will be negatively affected. Note that this applies to the second most heavily weighted reason code.
• If you have limited credit, obtain additional credit. Not having sufficient credit can negatively affect your score.
• Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.

How do I obtain a copy of my credit report?

FREE copies of your reports can be obtained by visiting www.annualcreditreport.com or calling (877) 322-8228. While the free reports will not provide a credit score, you will be able to see all of the information that is being reported on you and check for any errors.

What if there is an error on my credit report?

If you see an error on your report, report it to the credit bureau. The three major bureaus in the U.S. are Equifax (1-800-685-1111), Trans Union (1-800-916-8800) and Experian (1-888-397-3742). All have procedures for promptly correcting errors.