11.2 Credit Bureaus and FICO

11.2 Credit Bureaus and FICO

Today you will: Identify categories that affect a credit score & Differentiate between the three credit bureaus

Credit Bureaus

CREDITORS

A business or company that loans money. Typical Examples: -Banks -Mortgage Lenders -Credit Card Companies

Collect and synthesize data about an individual's credit worthiness. 3 Main Credit Bereaus:- Experian -TransUnion -Equifax

All of these credit bereaus calculate scores between 300 - 850.

Equifax

Experian

TransUnion

- OldestEquifax shows a risk score of how likely a consumer is to become 90+ days late on payments within 2 years of a new account.

- Newest-Largest -Collects rental payment data from Landlords

Transunion goes the most in-depth with your employment info such as employer name, job title, and dates employed.

FICO scores

"Fair, Isaac, and Company"

What is a FICO score?

When are the scores calculated?

What do they mean?

The higher the FICO score, the lower the risk is for the lender.

Credit scores are determined from your Credit History:Payment HistoryCurrent Debts/Amounts OwedCredit History AgeTypes of CreditNumber of Inquiries(New Credit)

Number of Inquires

Which of the following affects your credit score the most?

Payment History

Current Debts

Types of Credit

Credit History Age

Which of the following would help you achieve the highest "Types of Credit" criteria score without also negatively impacting any of the other criteria?

Over a span of several years, you get a credit card, take out a loan, and open new money accounts.

You never open a credit card and you never take out a loan.

Over a span of serveral years, you start closing your oldest credit cards and money accounts. Also, you finish paying off all loans and do not get new ones.

You open 5 new credit cards today.

You need a $4,500 loan that you plan to repay over 3 years. Your credit score is currently 670.

How much money would you save if your credit score was 700+ rather than 670?

Upcoming:Wednesday: 11.3 Calulating Weighted Scores Thursday: 11.4 How to Improve your credit Friday: Unit 11 project

Have a great day!

• If you do not have any credit history - you will not have a FICO score.
• The FICO scores are dynamic and can change up or down when your data at the credit bureau changes.
• They are calculated in real time so that they are relevant when you or the lender pull the credit report.