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Credit Score Information
- 1. Creating the Foundation for Success
- 2. 油
- 3. 油
- 4. Credit Scores FICO If I give this person a loan or credit card, how likely is it that I will get paid back on time? A credit score is a number that summarizes your credit risk, based on a snapshot of your credit report at a particular time. Higher the score, the lower the risk.
- 5. Predicts the statistical chance of a consumer becoming 90 days late or more on a particular loan obligation What Do the Scores Mean?
- 6. Predicts the statistical chance of a consumer becoming 90 days late or more on a particular loan obligation Each score is specific for each bureau What Do the Scores Mean?
- 7. Predicts the statistical chance of a consumer becoming 90 days late or more on a particular loan obligation Each score is specific for each bureau Scores range from 300 to 850 for Classic FICO What Do the Scores Mean?
- 8. Predicts the statistical chance of a consumer becoming 90 days late or more on a particular loan obligation Each score is specific for each bureau Scores range from 300 to 850 for Classic FICO The higher the score the less the odds of default What Do the Scores Mean?
- 9. Predicts the statistical chance of a consumer becoming 90 days late or more on a particular loan obligation Each score is specific for each bureau Scores range from 300 to 850 for Classic FICO The higher the score the less the odds of default The score is generated by analyzing the information contained in the consumers credit report at THAT point in time What Do the Scores Mean?
- 10. CREDIT SCORE! Consumer Default: What are the Odds?
- 11. Odds on Consumers: 90 Days Late Score Odds Above 800 1292 to 1 760 to 799 597 to 1 720 to 759 323 to 1 700 to 719 123 to 1 680 to 699 55 to 1
- 12. Score Odds 660 to 679 38 to 1 620 to 659 26 to 1 500 to 600 8 to 1 Below 500 Odds on Consumers: 90 Days Late FORGET IT!
- 13. 油
- 14. WHY IS GOOD CREDIT SO IMPORTANT? Lower interest rates on home, auto, personal loans. Lower hazard, auto, life insurance premiums. Better job prospects, renting a home. Easy access to cash Will significantly impact your current and future financial outlook
- 15. The Cost of Bad Credit Auto Loan : $12,000 for 5 years 720 FICO : 4.9% = $226/mo. $1,554 in interest 600 FICO : 18% = $305/mo. $6,283 in interest $79 difference per month! $4,729 in interest over 5 years! Copyright 2009 Wellness Credit
- 16. The Cost of Bad Credit Auto Insurance : 5 years 720 FICO : $809/yr. 600 FICO : $964/yr. $775 difference over 5 years! Copyright 2009 Wellness Credit
- 17. A Low Credit Score Can Cost You BIG! 30 yr fixed rates on a $200,000 loan: FICO Score APR Rate Monthly Payment Interest Paid 720-850 5.125% $1,089 $192,033 700-719 5.375% $1,120 $203,180 680-699 5.5% $1,136 $208,807 620-679 5.875% $1,183 $225,904 620- N/A N/A N/A
- 18. Jack & Brad: $200,000/30yr. Fixed Only a 42 Point Difference! Jack Brad Salary Equal Equal Credit Score 721 679
- 19. Jack & Brad : $250,000/30yr. Fixed Jack Brad Salary Equal Equal Credit Score 721 679 Yearly Savings $1,500 0
- 20. Jack & Brad : $250,000/30yr. Fixed Jack Brad Salary Equal Equal Credit Score 721 679 Yearly Savings $1,500 0 Interest Saved over 30 Years $33,871 0
- 21. CREDIT SCORE! What are the determining factors?
- 22. FACTORS OF CREDIT SCORING
- 23. 1. Payment History 35% of Credit Score
- 24. Timing of the delinquency Payment History : 35% of Credit Score
- 25. Timing of the delinquency Level of Delinquency Payment History : 35% of Credit Score
- 26. Timing of the delinquency Level of Delinquency Last activity date Payment History : 35% of Credit Score
- 27. Timing of the delinquency Level of Delinquency Last activity date Missed payments (low vs. high) Payment History : 35% of Credit Score
- 28. CREDIT SCORE! How long do delinquencies stay?
- 29. Delinquencies on Credit Reports Bankruptcies Chapter 7 & 11 10 Years from filing date Chapter 13 7 Years from filing date Tax Liens 7 Years from date satisfied Late Payments 7 Years Charge-offs 7 Years from 1st late pay Judgments 7 Years Inquiries 2 Years
- 30. Revolving Debt Ratio 30% of Credit Score
- 31. Revolving Debt Ratio: 30% of Score Cards: Share debt among many cards Use each every 6 months Do not close credit cards Pay-off before closing date Get added as an authorizer user*
- 32. Revolving Debt Ratio: 30% of Score Cards: Share debt among many cards Use each every 6 months Do not close credit cards Pay-off before closing date Get added as an authorizer user Credit Ask for credit limit increases Limit Maintain balances below 30% Make sure the limit is reported
- 33. Spouse: Keep credit separate from spouse Transfer debt to one spouse Revolving Debt Ratio: 30% of Score
- 34. Spouse: Keep credit separate from spouse Transfer debt to one spouse Business Utilize Business Credit! Reports dont distinguish personal from business Some Business Cards dont report. Revolving Debt Ratio: 30% of Score
- 35. 15% of Credit Score Average Age of Credit File
- 36. Average Age of Credit File The longer the history, the better
- 37. Average Age of Credit File The longer the history, the better Hold onto old credit cards
- 38. Average Age of Credit File The longer the history, the better Hold onto old credit cards Piggyback off Mom to get history*
- 39. 10% of Credit Score
- 40. Mix of Credit: 10% of Credit Score A mixture is best
- 41. Mix of Credit: 10% of Credit Score A mixture is best 3 to 5 revolving credit cards
- 42. Mix of Credit: 10% of Credit Score A mixture is best 3 to 5 revolving credit cards A mortgage account
- 43. Mix of Credit: 10% of Credit Score A mixture is best 3 to 5 revolving credit cards A mortgage account Auto loan
- 44. Mix of Credit: 10% of Credit Score A mixture is best 3 to 5 revolving credit cards A mortgage account Auto loan Equity lines of credit
- 45. Inquiries 10% of Credit Score
- 46. Inquiries: 10% of Credit Score Inquiries affect the score for 1 year
- 47. Inquiries: 10% of Credit Score Inquiries affect the score for 1 year Inquiries can cost 0 50 points
- 48. Inquiries: 10% of Credit Score Inquiries affect the score for 1 year Inquiries can cost 0 50 points Score is only reduced for 1st 10 inquiries
- 49. Inquiries: 10% of Credit Score Inquiries affect the score for 1 year Inquiries can cost 0 50 points Score is only reduced for 1st 10 inquiries Auto & mortgage inquiries have a 30 day buffer period within a 45 day period are treated as 1
- 50. Inquiries: 10% of Credit Score Inquiries affect the score for 1 year Inquiries can cost 0 50 points Score is only reduced for 1st 10 inquiries Auto & mortgage inquiries have a 30 day buffer period within a 45 day period are treated as 1 Many inquiries dont count personal promotional & job related insurance & account reviews
- 51. Inquiries Continued Hard Inquiry: Inquiry made with intent to extend credit. MAY impact scores Stays on credit for 24 months. Soft Inquiry: Inquiry made to offer you pre-approved credit Periodic account review by an existing creditor NO impact to credit scores Only on consumer report Stays on credit for 6 months.
- 52. Overview of Good Credit A mortgage, installment (auto), 3 to 5 open CCs. A timely pay history on all accounts. At least three to four accounts actively used. Balances do not exceed 30% (best case) and no more that 50% of the available credit limit. Open accounts have at least a 24 month history.
- 53. >8 to 10 open trade lines. Late pays > 30 days in last 12 to 36 months. <4 open trade lines or <4 are actively used. Open trade lines are less than 24 months old. Credit balances > 50% Overview of Challenged Credit
- 54. Overview of Alternative Credit Cancelled rent checks Utility company credit letter (electric or gas) Phone or cell phone company credit letter Cable company credit letter Rent Reporters (www.rentreporters.com)*
- 55. CREDIT SCORE! Now you Know!
- 56. Wellness Credit - Our Program FREE Initial Consultation Credit Analysis & Strategic Plan Restoration Process 6 months We work directly with credit bureaus and creditors to negotiate and enforce FCRA. Education & Credit Preservation
- 57. How We Work We meet with your client and determine IF we can even help them*. If so, we enroll them in the program and send YOU $100. Well also send you a link to login and keep you updated on their status. If we dont help them, we have a 100% money-back guaranty!
- 60. www.myWellnessCredit.com (970) 449-4304 [email_address] Copyright 2009 Wellness Credit