A three-digit number that creditors use to quickly evaluate whether to give someone a loan and how favorable the terms should be, the credit score remains something of a mystery to many. How is it figured out? What matters, and what doesn’t matter? The exact scoring system is a proprietary secret of the Fair Issac corporation, but there are 5 general categories, each weighted differently, that determine where you sit on the range from 300-850. In easy-to-read outline form, let’s take a closer look.
With low mortgage rates and a battered housing market, it’s a ripe time to buy a home. Here are five credit score related things you should avoid doing before buying a home.
The next time you apply for a credit card, your credit report and income will be only a part of the criteria used to determine your creditworthiness. For that matter, as long as you have the card, what you use it for will be noted and added to a growing set of data that makes up your psychological profile, which will then be referred to every time the bank deals with your or reevaluates your risk as a customer.
Getting into debt is easy. Winding up in default is easier yet; all you have to do is not pay your bills for several months! So how do you deal when the lender doesn’t want to wait around for you any longer and has moved on to more drastic action? Here’s three ways, only two of which are advisable.
With the recession, a lot of personal finance experts have started dispensing credit advice. They advise that you never cancel cards because it’ll hurt your score. Do you know why?
Sallie Mae‘s 2009 study of credit card use shows that students just love binging on plastic. Kids these days have more than four cards on average, and most of them carry a balance pushing $3,000. Many don’t tell their parents, and almost a fifth graduate with more than $7,000 of debt. This is how meltdowns start…
Did you try Bankrate’s score estimator when it was featured on the Consumerist two years ago? I did and I wondered how accurate that 12-question quiz was. Answer? Not bad.
The Washington Post has just published a story accusing executives at Chrysler Financial of turning down a $750 million government loan because they “didn’t want to abide by new federal limits on pay,” and instead opted for more expensive private sector financing, “adding to the burdens of the already fragile automaker and its financing company.” Chrysler Financial denies the charge.
Sorry to disappoint all of you who think that the two-person Segway is the most innovative thing GM has produced in its long history — it seems that the company’s most important new idea was consumer credit. More specifically, convincing a nation of thrifty debt-averse tightwads that taking on debt was socially acceptable. Yes, it’s true. We weren’t always a bunch of debt junkies.
It’s a tough economic climate to be graduating from school — and maybe an even tougher one for those of you trying to get financial aid. We’ve put together a list of some financial aid and student lending resources to help make things easier.
A study from Fair Isaac confirms that even the best borrowers are seeing their credit lines slashed as banks move to boost profitability during the recession. 16% of Americans have seen their credit lines reduced by an average of $2,200, and of them, 11% had no late payments or negative marks on their credit report.
A reader wants to know why Chase is pushing him so hard to use his debit card like a credit card when paying for things—they’re promoting a contest for people who do this, and on every insert or blank space in the paperwork that accompanied his newest card, they encourage him to always select “credit” over “debit” at checkout. Why?
Dan wrote in to let us know his $8,800 GEICO Mastercard now has a $500 line of credit. “It’s not you, it’s us,” is basically what GEICO told him in their letter on March 12th. They also say they’re doing this to every one of their Mastercard holders. Dan notes, “Interestingly enough, this new limit is less than the 6 month rate GEICO was charging me for my two cars, meaning that I couldn’t even use their preferred card to pay their premiums.” You can read their letter below.
Reader Warren says that Home Depot raised his APR to 25.99% — causing him to cancel his account. Yikes.
and a plunging debt-to-income ratio that reveals a nice plump credit score. Here’s the new rules of credit-worthiness game: