2. Understanding Your Credit and Credit ScoreBy
Money Smart Week of El Paso Partners

3. Who is Fair ISACC?

4. Earl Isaac - Mathematician
Bill Fair – Engineer
Earl Isaac - Mathematician
Founded in 1956, provides consulting services and enterprise decision management systems. They both developed the FICO scores. FICO is a registered trademark of Fair Isaac Corporation. The company is based in Minneapolis and has offices in North America, South America, Europe, Australia, and Asia. The company employs about 2200 people.

5. What is a Credit Score?
A number that summarizes your credit risk, based on a snapshot of your credit report at a particular point in time.
A Credit score helps lenders evaluate your credit report and estimate your credit risk. Your credit score influences the credit that’s available to you and the terms i.e. interest rate and terms.

6. Why are FICO scores important?
Helps us get loans faster
Credit decisions are fair
Other credit problems count for less
1- Means you will get an answer more quickly. Today many credit decisions can be made within minutes.
2. – Lenders can focus only on the facts related to credit risk, rather than their personal opinions or biases. Facts like race, gender, religion and marital status are not considered by FICO.
3 - Poor performance in the past fades a way over time. Good payment patterns helps these problems.

7. How fast does your FICO score change?

8. Your score changes whenever your credit report changes
Bankruptcy can affect your score
Late payments
Paying on time

9. What does a FICO score consider?

10. Types of Credit – 10%
New Credit – 10%
Length of Credit History – 15%
Amount Owed – 30%
Payment History – 35%

11. Payment History Pay Your Bills on time Get current and stay current
Be aware of collection accounts
Contact your creditor if you are having trouble making your payments
Pay – Delinquent payments and collections can have a negative effect on your FICO score
Get current - The longer you pay your bills on time, the better your FICO score
Be aware – Still will consider this information
Contact – Seek assistance from a legitimate credit counseling agency

12. Amounts Owed
Keep balances low on credit cards and other revolving debt
Pay off debt rather than moving it around
Don’t close unused credit cards
Don’t open a number of new credit cards
Avoid credit repair agencies that charge a fee for their services
Keep balances – High outstanding debt can lower your FICO score
Pay off debt – The most effective way to improve your FICO score
Don’t close – owning the same amount but having fewer open accounts may lower your FICO score
Don’t open – Could backfire and actually lower your score
Avoid credit – No one can force credit reporting agencies or lenders to remove accurate information from a credit report.

13. Length of Credit History
New accounts will lower your average account age, which will have a larger effect on your FICO score.
Longer credit history will increase your FICO score

14. New Credit Do your rate shopping within a short period of time
Be careful about opening new accounts that you don’t need
Re-establish your credit history if you have had problems
It’s okay to check your own credit report and FICO score
Do your – Shop for all rates within 30 days
Be careful - Opening new accounts can lower your FICO score in the short term.
Re-establish – Opening new accounts responsibly and paying them off on time will raise your FICO score in the long term
Its okay – This won’t affect your credit score as long as you order your credit report directly from the credit reporting agency

15. Types of Credit in Use
Apply for and open new credit accounts only as needed
Have credit cards – but manage them responsibly
Closing an account doesn’t make it go away
Apply for – Don’t open accounts just to have a better credit mix
Have credit cards – Having credit cards and installment loans will raise your FICO score
Closing – A closed account will still show up on your credit report ,and its history will be considered by your FICO score.

16. Credit Report A credit report tells creditors the following:
Who you are
How much debt you have
Whether you have made payments on time
Whether there is negative information about you in public records
How many inquires are listed in your credit report

17. Free Annual Credit Report
Visit:
Call:
Mail
Annual Credit Report Request Service
P.O. Box
Atlanta, Georgia

18. Credit Reporting Agencies
Equifax – (800)
Experian – (888)
TransUnion – (800)

19. Turned Down For Credit
The Equal Credit Opportunity Act (ECOA) gives you the right to obtain the reasons why you were declined credit. You have 60 days to request a copy of the report from the three credit reporting bureaus.

20. Reasons for Denial Bad Credit History (Delinquent credit obligations)
Do not meet income or residence requirements
Too many inquiries
Public records
Credit Utilization
Too many credit cards
Limited credit history

21. Checking Your FICO Score
FICO scores can be checked online, although in most cases there will be a charge to obtain

22. Checking Your Credit Report
Review your credit report on a yearly basis
Review your credit report from each of the credit reporting agencies

23. Thanks!