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1、UnderstandingYourCreditScoreWhatdoesyourscoremean?Thisratingsystemisasnapshotoftheriskyoucurrentlyrepresenttoalender.Severalparametersinyourcreditfile,includinglengthofcredithistory,numberofopenaccounts,loans,mortgages,publicrecords,andothersareformulatedtoproduceathree-digitscorebetweenabout300and9
2、50.ThereareotherscoresusedbylendersandinsurancecompaniessuchasApplicationandBehaviorscores.Theseotherscorestakeotherinformationintoaccount.Usuallyalenderwilluseacombinationofyourcreditscorewithotherfactorswhendeterminingyourrisk.Theyallhavethesameobjective,todeterminethepotentialriskoftheborrower.Re
3、gardlessofhowthescorewasgenerated,theyallyieldanindustrystandardthree-digitscore.Thisscoreplacestheborrowerinoneofthreemaincategories.Prime,Sub-Prime,andCautiousPrimeIfyourcreditscoreisabove680,youareconsideredaPrimeborrowerandW川havenoproblemgettingagoodinterestrateonyourhomeloan,carloan,orcreditcar
4、d.Sub-PrimeIfyourcreditscoreisbelow680,youareSubPrime*,andwilllikelypayamuchhigherinterestrateonyourloan.CaUtiOIISBelow560istheCautiousscore.Atleastthatishowmostlendersandcreditissuersperceiveit.Youcanstillgetacreditcardbutyouwilllikelybehitwithasecuritydepositorhighacquisitionfee.Inadditiontothatyo
5、urinterestratewilllikelybe22to23%.Youcanforgetaboutmosthomeloansandthemajorityofnewcarloansatthisscore.Below560isnoplacetobe.Youwillpaymuch,muchmoreinhigherinterestandunnecessaryfees.Youmayevenpaymoreforyourinsurancerates.Averylowscorecanevenpreventyoufromgettingajobwithmanycompanies.Howmuchdoesalow
6、scorecostyou?CreditCardSMostifnotallprimecreditcardsareentirelyoutofreachtoconsumerswithbadcredit.Andthefewcreditcardsthatareavailabletothem(knownasusub-primecards)typicallyrequireexorbitantsetupfeesorrecurringmonthlyfees,offerverylowcreditlines,oftenrequirecashdeposits,andinmostcasesdonotevenreport
7、yourpositivecreditactivitytothecreditbureaus.AUtOmObileFinanCinaIfyouaremakingpaymentsonacar,youareprobablypayingbetween$5,000and$9,000morejustforhavingbadcredit.Thisaddedinterestshowsupeverymonthinahigherpayment.Takealook.$20,000carpaidover5years:CREDITSTATUSRATEPAYMENTCOSTOFBADCREDITPerfect10%$424
8、.94$0.0()MildlyDamaged14%$465.37$4,722.54Damaged20%$529.88$8,593.30HOmeMOrtaaaeBadcreditinautofinancingcanreallyhurt,butitisnothingcomparedtothecostofbadcreditwhenahomeisinvolved.Atypicalhomecancostbetween$50,000and$130,000moreininterestifyouarebuyingthehomewithbadcredit.$100,000homepaidover30years:
9、CREDITSTATUSRATEPAYMENTCOSTOFBADCREDITPerfect7%$655.30$0.00MildlyDamaged9%$804.62$50,155.24Damaged12%$1,028.61$130,791.63Asyoucansee,alowscorecancostyouhundredsofdollarspermonth.Itisimportanttoobtainandmaintainashighacreditscoreaspossible.Howarecreditscorescalculated?Themethodsofcalculatingyourcredi
10、tscoremaydifferslightlydependingonthecreditbureau.Whenobtainingyourscoreitisadaptedtoeachbureauandisgivenitsownname:Equifaxuses“Beacon，TransUnionuses“Empirica,andExperianusesuExperianZFairlsaac.nThesescoresarealsoreferredtoasyourBureauScores.nSinceyourscoreisderivedfromyourbureaudata,itwillchangeeve
11、rytimeyourreportschange.Howeveryourscoreiscalculated,itwillalwaystakeintoconsiderationmanycategoriesofinformation.Noonepieceofinformationorfactordeterminesyourscore.Astheinformationinyourcreditreportchanges,theimportanceofoneorseveralfactorsmaychangeinyourcreditscore.Lenderslookatmanythingswhenmakin
12、gacreditdecision,includingyourincomeandthekindofcredityouareapplyingfor.However,yourcreditscoredoesnotreflectthesefactsasitonlyevaluatestheinformationretainedbythecreditreportingagency.Whatfactorsaffectyourcreditscore?Therearefivefactorswhichareusedincreditscoringcalculationsthatdetermineyouroverall
13、creditscore.PreViOUSCreditPerfOrrnanCe(PaVmemHiStOrV)35%Alenderwantstoknowwhatyourpaymenthistoryislike.Haveyoupaideverythingontime,areyoulateonanythingnow,etcEYourpaymenthistoryisjustonepieceofinformationusedincalculatingyourscore,althoughitcanbetheveryimportant. Paymenthistoryonyouraccounts.Thesein
14、cludecreditcards,retailaccounts(departmentstorecreditcards),installmentloans,financecompanyaccountsandmortgageloans. CollectionitemsandPublicrecords.Thisincludesjudgments,bankruptcies,suits,liens,collectionitemsandwageattachments.Mostoftheseareconsideredquiteserious,althougholderitemscoudlessthanrec
15、entones. Itsallinthedetails.Thisincludesspecificdetailsonlateandmissedpayments.Negativeinformation/latepaysaredeterminedusingthreefactors.oRecency-Howlongagowasthelastdelinquency?Howoldisthelatepay?A30-daylatepaymentmadejustamonthagowilleffectyourscoremuchmorethana90-daylatepaymentfromfiveyearsago.o
16、Severity-Whatlevelofdelinquencywasreached?Howlatewasthepaymentmade?30days,60days,90daysorworstofall,isthepaymentstilloutstanding.oPrevalence-Howmanycreditobligationshavebeendelinquent?Theamountofnegativeitemsascomparedtoyourtotalamountofavailablecredit.Forinstance,5accountsshowing3latepaymentsismuchworsethan10accountsshowing4latepayments.Oneofthebiggestsubfactorsishowmanyaccountsshownolatepaym
