CREDIT SCORES IN 2006
What You Need to Know…
(800) 462-2684
Where do you transferees fit in?
National Distribution of Credit Scores
30% 25%
% of Population
Credit Statistics:
11 $12,190 1 in 8
13%
Average number of credit obligations per consumer Amount of available credit most consumers have access to Use 80% or more of their credit limit. More than half are using less than 30% of the available credit Percentage of consumers carry more than $10,000 of debt as reported to the credit bureaus. This includes all credit cards, lines of credit, and loans-everything but mortgages. Number that has ever been 30 or more days late. Only 2 out of 10 have ever been 60 or more days late Percentage that has ever had a loan or account closed by a lender due to default National average credit score. Credit scores can range from 300-850
27% 18% 15% 12% 2%
up to 499
20% 15% 10% 5% 0%
500-549 550-599 600-649 650-699 700-749 750-799 800+
5%
8%
30
Credit Score Range
Source: http://www.myfico.com
Did you know?
Negative items affect your credit score much more quickly than positive items. Late payments can negatively affect your score in just a few weeks, whereas paying bills on time may take 6 to 12 months to generate a significant improvement in your score.
> 4 out of 10
10 678
Source: http://www.myfico.com
Credit History is #1 Reason People Are Denied For a Loan
What’s Not In Your Score What’s In Your Score
•
Top 5 Ways You Can Improve Your Score
1. Pay your bills on time. 2. If you’ve missed payments, get current and stay current. 3. Keep balances low on revolving credit, generally below 70% of the credit limit. 4. Complete the Pre-Approval process with different lenders within a short period of time, typically 14 days.
Your salary, occupation, title, employer, date employed or employment history Your race, color, religion, national origin, sex and marital status Your Age Where you live Any interest rate being charged
•
Payment History, 35%
• • • •
• • • •
Amounts Owed, 30% Length of Credit History, 15% New Credit, 10% Types of Credit Used, 10%
Length of Credit History New Credit Types of Credit Used
15% 35% 10% 10% 30%
Payment Hist ory
5. Open new accounts responsibly and
pay them off on time to reestablish your credit history.
Amount s Owed
GMAC Mortgage, Corporate Relocation Division
Credit Score - What You Need to Know...
Page 2
Do Foreign Nationals and New College Grads have Credit Scores?
YES. Now, consumers without extensive credit histories can qualify faster and more easily for their first credit card, auto loan or home mortgage.
Freeze your credit?
Why ,Who and How
Why should one freeze their credit? Placing a security freeze on your credit reports means an identity thief — even one who has your name, address, Social Security number, birth date and more — will not be able to get new loans and credit in your name. That’s because lenders, retailers, utilities and other businesses need access to a credit report to review and approve new credit, loans, and services. Who can freeze their credit?
Non-Traditional Scoring
•
Traditional Scoring
•
Geared towards
•
New to credit, thin file, and nonexistent credit history consumers • Immigrants • Young people • Recently widowed or divorced
General public
Percentage
10% of consumers have no credit bureau trades • 15% have very thin credit bureau files
• • •
•
75% of consumers have full bureau records Payment history Amounts owed Length of credit history New credit Types of credit used 3 digit scoring Ranges from 300 to 850
701
Data
Deposit account records Pay day loan cashing Purchase payment plan performance 3 digit scoring Ranges from 300 to 850
695
• • • • • • •
Residents of California, Vermont, Texas, Louisiana, Colorado, Washington and Maine. An additional 22 states are considering this law. How can I freeze my credit? To freeze your credit you MUST write each of the 3 credit bureaus and provide the following: • Certified mail receipt. • Full name, address, Social Security number and date of birth. • A copy of your police report or other investigative report filed with law enforcement. • Provide prior name and address if either has changed within the past 2 years. Write to the addresses below: Equifax Security Freeze P.O. Box 105788 Atlanta, GA 30348 Experian Security Freeze P. O. Box 9554 Allen, TX 75013 Trans Union Security Freeze P.O. Box 6790 Fullerton, CA 928346790
Score
• •
Average National Credit Scores by Region
678
676
684 671 656 674 675
690
U.S. National
Pacific
Mountain
West North Central
West South Central
East North Central
East South Central
South Atlantic
Middle Atlantic
New England
Source: http://www.NationalScoreIndex.com
F.A.Q.’s
Do multiple mortgage pre-approvals affect your credit score? If their score is affected at all, the effect will be negligible. If you apply with several mortgage lenders within a short period of time (generally 14 days), these are typically treated as one inquiry and have no impact on your score. In comparison, if you apply for several credit cards within a short period of time there is a higher incidence of their score adjusting negatively. Can my mortgage counselor help me improve my credit score? Experian is developing a new tool that uses artificial intelligence and the most advanced scoring models to compare credit data across all three credit reporting agencies simultaneously. Mortgage Counselors will be able to simulate how specific credit-related actions can affect a consumer's overall credit score.
Credit Reporting Resources
www.myFICO.com www.transunion.com www.equifax.com www.experian.com http://www.ftc.gov/bcp/conline/ed cams/credit/index.html www.annualcreditreport.com
GMAC Mortgage, Corporate Relocation Division