Question
how is a credit score calculated anyway?
yeah about this 0 credit score... it's nuts! i bought a truck a few years back with high payments and very high interest. but i made my monthly payments on time every month. i NEVER missed a payment for the better part of 3 years. i ended up coming into some money and paying off the last 4k all at once. that was the only loan i have ever had in my name, and i paid it off like everyone dreams of paying off a loan, and i have a 0 credit score now. i need a new truck now and i can't get a loan, can't get a credit card... that's not right! it's like, can't have credit unless i use credit, i can't use any credit because i can't get credit. i'd like to know how the credit system is based. if a person has credit cards ran thru the roof and can't make their payments, they have a decent score. if i don't use credit cards (to keep from destroying my credit) i don't have a pot to pee in or a window to throw in out of! credit, to me, is a joke. the people in life that try to watch their spending habits and live within their means are punished whereas the people who blow their money, are always behind, and can't get ahead are rewarded, in this case by getting more and more credit which they're probably just gonna abuse anyway. WTF!?
6 months ago - 4 answers
Best Answer
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FICO scores are based on the following factors; 1. Payment history (longer the better) 35% 2. Time in bureau (longer the better) 15% 3. Types of credit (mix of revolving & installment) 10% 4. New credit (inquiries & new accounts) 10% 5. Debt to credit ratio (lower the better) 30% To have the best score and profile people need 3-4 credit card accounts (revolving) with balances below 30% of their limits and 2 cars, boats, homes, motorcycles, computers, furniture or personal accounts (installment) all with good long payment history's. The bad thing is the scores are 90% based on the last 24-months of activity so if people don't continue to use their credit their scores do go down. Fair most likely not but that's the way it is. The quickest way to build score is to use at least 2 credit cards for every day things, never exceed 30% of your limits and pay them off in full every month before the due date. I have done this with 3 cards for the last couple of years and all of my score are well over 800 and I have made several hundred dollars in cash back rewards and never paid any fees or interest. Not bad for using someone elses money for free.
Source(s)
Finance Manager for over 9-years / 2009 edition Consumer Action Handbook.
by SPIFIMAN1
6 months ago
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Other Answers
Your credit score is a number generated by a mathematical algorithm -- a formula -- based on information in your credit report, compared to information on tens of millions of other people. The resulting number is a highly accurate prediction of how likely you are to pay your bills. If it sounds arcane and unimportant, you couldn't be more wrong. Credit scores are used extensively, and if you've gotten a mortgage, a car loan, a credit card or auto insurance, the rate you received was directly related to your credit score. The higher the number, the better you look to lenders. People with the highest scores get the lowest interest rates. Scoring categories Lenders can use one of many different credit-scoring models to determine if you are creditworthy. Different models can produce different scores. However, lenders use some scoring models more than others. The FICO score is one such popular scoring method. Its scale runs from 300 to 850. The vast majority of people will have scores between 600 and 800. A score of 720 or higher will get you the most favorable interest rates on a mortgage, according to data from Fair Isaac Corp., a California-based company that developed the first credit score as well as the FICO score.
by Kevin H.- 6 months ago
Well, the credit system is designed mainly to benefit lenders, not consumers. This is part of the reason that people who use credit *very* minimally are not rewarded. Even people who have credit cards really need to use them regularly in order for it to really build their scores. But you can use credit just enough for it to benefit your scores *without* abusing it and getting yourself into a pile of debt. All you need to do with credit cards is charge a very small amount every month or two or three, and pay it off in the same month. That way it benefits your score but you don't even have to pay interest. If you haven't applied for a Capital One card yet, you should try them. That was my first card, and they approved me with absolutely no credit history at the time. If you can't get approved for a regular card, you can get a secured card instead. You have to pay a deposit upfront in order to use them, but it's worth it to build your credit. (Orchard Bank is a well-known secured card.) Here is an explanation of how credit scoring works: creditrepairanddebtsolutions ...
by aplbtm83- 6 months ago