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Success F inan ce
Credit scores are an integral part of our lives, yet we don’t think of them until we need a loan. Many people
don’t even know what goes into their score or how to improve it. The following are some helpful facts as well
as some interesting trivia.
T I P S BY S TAC Y W Y N N
Good Credit: The available “space”
on your credit cards helps to show
credit-worthiness. Closing cards
shrinks your credit “space.” Alternatively,
requesting a limit increase can potentially
boost your score, but not always.
The 5 Factors: Payment history is
35% of the score. Amounts owed is
30%. Length of credit history is 15%.
The credit mix (cards, loans, etc.) is 10%. And
new credit counts for the remaining 10%.
2. New Credit: Even in today’s
enlightened times, opening several
new credit accounts in a short period
of time can lower a score, especially for those
with a short credit history.
Older/Better: The age of your
credit card accounts is an important
factor in determining credit
worthiness. Closing your oldest card can cause
your score to drop.
8. Education Aside: Your degrees
do not improve your credit score.
Likewise, having a high school
education or less does not detract from the
score. Other Non-Factors: The balance
in your bank accounts, stock, portfolio,
employment status and/or your salary
have no bearing on your credit score.
62 Job Privacy: The myth that
employers can get your credit score is
just that — a myth. They can, however,
with your approval, get a specialized version of
your credit report for employment screenings.
Data Usage: While car insurance
companies don’t use your credit
score to help determine your
insurance rates, over 90% of insurers use
a credit-based auto insurance score when
9. Married/Divorced: After a 15-year
study, the Federal Reserve discovered
that couples with widely varied
individual credit scores in the beginning of the
relationship were more likely to separate.
10. The 1950s: Credit scores didn’t
exist until the mid-20th Century.
Prior to that, one would sit
down with a banker directly in a very varied,
subjective, difficult loan process.
11. Zero Score: No credit score?
Never fear, you can still get
a mortgage through “manual
underwriting” which takes into account assets,
bills and your overall financial health.
12. Other Scores: Banking matters
are tracked as well, via TeleCheck,
ChexSystems, and EWS which help
determine things such as whether or not you
should be allowed to open a checking account.