PRESENTATION OUTLINE
Before Credit score
- No standard for mesuring risks
- Up to individual lenders to judge loan applicants.
A credit scrore
- is a number used by fianacial institutions and credit card companies to determine risk level when issuing you loan or a credit card.
FICO
- Is the most widely credit score model used in north America.
- It was introduced in 1989 by Fair, Isaac and Company.
- This Company is now called Fair Isaac Company
The Credit score Companies
- Equifax
- Transunion
- Experian
Since every company has its own formula, your FICO score can vary depending on which bureau supplies the information
Most credit scores are between 350 and 800
A low score means you could be denied a loan or a credit card
You might get a credit card or a loan approved but a higher interest rate
Loan and credit card approval at best rates :)
It matters
- Renting an appartment
- Student loans
- Car payments
- Job Applications
The Breakdown of Credit Score
Payment History
- 35% Payment history: making payments on time boosts your credit score.
Capacity
- 30% Capacity includes
- How much of your available credit do you use
- The less you use the better
- Maxing out your lines of credit actually hurts your credit score
Length of Credit
- 15% Length of Credit : A long History of good credit habits raises your score.
New Credit
- 10% New credit :
- Opening a bunch of credit lines on a short period of times can hurt your credit score
- Uncludes retail cards
Mix Credit
- 10% revolving credit
- Includes credit cards installment, mortgage, etc.
Keep Track of Credit Score
Keep On Top
- You can request one credit score per year from each one of the major credit bureaus.
- Space your requests
- Use Credit Karma
Good Advice
- Be a good muslim.
- Pay on time
- Only buy what you can afford
- Use commun sens