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Creditscores



Understand what information is most likely to influence your credit scores. In general, the most significant factor affecting your score is whether you repay debts on time. Also important is how much you currently owe on each account compared to its original loan amount or credit limit. Additional factors include how long you have had your current loans and credit cards and the types of credit accounts you have (for example, managing both a credit card and an installment loan, such as for a car, could be viewed more favorably than just having one of those two loans).




creditscores


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Obtain and review a copy of your free credit report. Credit reports, produced by credit bureaus, detail each person's financial history, and they are used to develop credit scores. Under federal law, you can get at least one free report from each of the nationwide credit bureaus every 12 months. If you find an error, contact the credit bureau directly and correct the record.


Credit reports detail each person's financial history and they are used to develop credit scores. Under federal law, you can get at least one free report from each of the nationwide credit bureaus every 12 months. If you find an error, contact the credit bureau directly.


A credit score is a number based on information available in your credit report. You actually have more than one credit score, because different credit reporting agencies calculate your score differently. Generally, your scores are similar, but typically not identical. Credit scores also change over time as information is reported. For example, when you pay off a loan or get a new loan, that information is reported to credit reporting agencies and your credit score is recalculated. The good news is that you can improve your credit score.


Good credit scores suggest to banks and other financial institutions that you have handled your finances well. A credit score predicts how likely you are to pay back a loan on time. A scoring model uses information from your credit report to create a credit score. With a good credit score you could be offered better loan terms than someone with a poor credit score, such as a lower interest rate or more time to pay back your loan. A low credit score indicates that there is a higher risk that a person will not repay a loan. Landlords may look at your credit scores for the same reason. They want to know if you are likely to pay your rent on time. Some prospective employers also consider credit scores when hiring. Credit reporting agencies provide guidance on what a good score is. You can check with your lender on their credit score requirements.


Credit scores are required for most loans purchased or securitized by Fannie Mae. The classic FICO credit score is produced from software developed by Fair Isaac Corporation and is available from the three major credit repositories. Fannie Mae requires the following versions of the classic FICO score for both DU and manually underwritten mortgage loans:


Credit scores are not an integral part of DU's risk assessment because DU performs its own analysis of the credit report data. However, lenders must request credit scores for each borrower from each of the three credit repositories when they order the three in-file merged credit report, described in B3-5.2-01, Requirements for Credit Reports. If one or two of the credit repositories do not contain any credit information for the borrowers who have traditional credit, the credit report is still acceptable as long as


Loan Delivery collects credit score data for each borrower and also at the loan level. Lenders are required to deliver the representative credit score for all loans. This applies even if the average median credit score is used for loan eligibility and may result in delivery of loans with representative scores less than 620. For additional information, see the Loan Delivery Job Aid: Credit Scores.


For the most part, the minimum credit score needed for a loan approval will depend on the lender. Some lenders will tell you upfront what their minimum requirements are. While lenders might approve loans to consumers with a wide range of scores, the terms will likely be better for those with higher scores.


Credit scoring servicesUse a credit score service or free credit scoring site. Some sites provide a free credit score to users. Others may provide credit scores to credit monitoring customers paying a monthly subscription fee.


Credit scores fall within a range of 300 to 850, with 300 being very poor and 850 being excellent. Credit score ranges vary based on the credit scoring model used (FICO versus VantageScore) and the credit bureau (Experian, Equifax and TransUnion) that pulls the score. Below are the credit ranges for the two most popular scoring models:


"Excellent" is the highest tier of credit scores you can have. For FICO, it falls between the range of 800 to 850, and for VantageScore, it's between 781 to 850. A perfect credit score of 850 is hard to get, but an excellent credit score is more achievable.


If you're looking to build credit, becoming an authorized user on someone else's credit card is a smart option. It can be relatively low-risk and allows you to build or boost your credit scores. But before you sign up there are some things you should know:


Afraid you can't improve your credit score? Think again. This expert's credit score dropped to 547 during the last recession, but it's back in the 800s now. Once you understand how credit scores work and what options you have to raise your credit score, you'll be surprised to find that you don't need to be afraid of that three-digit number if it's currently less than desirable.


A credit score is a three-digit number that represents your creditworthiness. The most common type of credit score is a FICO Score, and scores range from 300 to 850. The higher the credit score, the better. (Read more about how to check your credit score for free.)


The changes will be extensive. About 40 million Americans are likely to see their credit scores drop by 20 points or more, and an equal number should go up by as much, according to Joanne Gaskin, vice president of scores and analytics at FICO, the company at the heart of the credit scoring system.


If your finances are in good shape and you already have a good credit score, you're likely to see your score improve, she says. But Gaskin says those whose scores will decline are typically people in the lower FICO score range, about 580 and below. (FICO scores range from 300 to 850.)


The minimum credit score needed to buy a house depends on the mortgage program and the lender. According to mortgage company Fannie Mae, a conventional loan usually requires a credit score of at least 620. But you may qualify for a government-sponsored loan with a lower score. Read on to learn more about credit scores and how they impact the home-buying process.


Keep in mind that there are multiple credit scores and scoring models. And scoring companies like FICO and VantageScore have different versions of their own scores. So you might see slight differences in your scores depending on what model was used.


The CFPB points out that your credit scores are a key ingredient in the mortgage qualification process and that higher credit scores generally help you qualify for lower interest rates. To see the potential impact of credit scores on mortgage interest rates, it helps to look at the following example:


The Federal Reserve recently released a report that explored gender-related differences in credit use and credit scores. In the study, the U.S. central bank analyzed over 10 years of data (2007-2017) from Mintel/Comperemedia and TransUnion. The sample of people reviewed for the study includes over 3,700 single men and nearly 4,000 single women.


Credit scoring models look at a lot of factors when figuring your credit scores. Your payment history, how often you apply for credit, when you first established credit and how much of your revolving credit card limits you utilize are all considered when your credit scores are calculated.


Because credit utilization is such a big deal when it comes to credit scores, it makes sense that the same Federal Reserve study that found single women have lower credit scores than single men also found that the same women had higher credit utilization ratios than their male counterparts.


FICO reveals that high score achievers (people with credit scores between 800-850) only utilize 4 percent to 5 percent of their credit card limits. The lower your utilization ratio falls, the better for your credit scores.


Fact: Having three major credit reports does not mean that we have just three credit scores. Rather, it means there are three versions of each type of credit score that we have. Take the VantageScore 3.0 credit-score model, for example. We each have one of these scores based on our TransUnion credit report, another based on our Experian credit report and a third based on our Equifax credit report.


As a result, the best way to use your credit score is not as a direct indication of approvability for a particular account or a given rate but rather as a way to determine roughly where your credit stands and then monitor its trajectory over time. With that in mind, you can get your free credit score from WalletHub, based on the VantageScore 3.0 model and TransUnion credit-report data. Sure, there are other places to either buy a credit score or order one for free, and you can compare them here. But our admittedly biased belief is that WalletHub represents the best option because our scores update on a daily basis rather than the weekly-to-quarterly schedules on which all other providers operate.


To learn more about the numerous credit scores each of us has, and the confusion that naturally causes, WalletHub asked a panel of money-management pros to share their thoughts on the following questions. See who they are and what tips they have, below. 041b061a72


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