Is Your FICO Score Above Or Below the Average American?

According to research from the large credit repository Experian, as of November 2009 the average credit score in America was 692. Experian uses the Fair Isaac Risk Model or FICO which is a credit scoring model. The scale ranges from 300 to 850. Today, a 692 is considered a B+ score. You need over 720 to get an A and over 740 to get an A+. 697 is considered "very good" and can still get you a loan with a pretty good interest rate.

Once you reach a score of 720, you are in the "excellent" range and can definitely qualify for loans at the best interest rates available. This is why it is so extremely important to stay on top of your credit and to have a good understanding of how credit scores actually work. Knowing your current status and setting goals for your future status can help you to save literally thousands and thousands of dollars in interest depending on how much you end up borrowing.

When it comes to mortgages, if you have a credit score that exceeds 620 and you can provide proof of enough income to comfortably handle all your debt, you should be able to get an FHA mortgage. But FHA loans come with 2 types of insurance that need to be paid- mortgage insurance premiums (MIP) and private mortgage insurance (PMI). MIP is an amount that is typically financed into the loan. It runs 1.75% of the amount borrowed. PMI usually will run .5% of the loan annually.

If you happen have an average American credit score, you can either be content with that and accept the fact that you are paying a little more on your interest rates, or better, you can begin working on your score to bring it up to a level that will qualify you for lower rates.

There are many ways that you can improve your credit score.

First of all, the easiest way to establish better credit is to pay all your bills on time. The timeliness of your bill payments accounts for 35 percent of your total credit score.

You should also try try to keep your balances at less than 50% of your available credit. The lower, the better. This calculation, which is averaged over all your open accounts, represents 30% of your credit score.

The next item to look at is how long you have had accounts open. The longer the history of an account, the more it will help your credit (provided that the payments have been made on time.) While there's not much you can do to change the length of your credit history, one thing you should definitely NOT do is close any accounts that have always been in good standing. This certainly helps older people more than the young but suffice to say - if you have some good paying accounts, keep them! If you have teenagers, work with them to start building good credit early on in life.

Having many sources of credit is usually a positive, as long as they have been managed well, meaning the payments have all been made on time. This aspect can account for up to 10% of your score.

Avoid signing up for multiple credit cards in a short time period. This will generate inquiries on your credit report. An inquiry by itself is not bad but if you have many inquiries it can lower your score. Limit applications to what you really need and definitely do not sign up for a credit card just because you get an application in the mail. Remember, Pre Approved just means that you live in a neighborhood where some of your neighbors exhibit timely credit payments, that's all.

So what do you say? Are you better or worse off than the average American?

Unsecured Credit Cards - General Information

An unsecured credit card is similar to an unsecured personal loan, because all it requires is your signature, without any form of collateral, and there's no money down (no deposit). However, the interest charged by the credit card company is calculated differently and generally at a higher rate, which makes it less attractive than a personal loan from a bank.

Another type of "unsecured card", which really isn't a credit card, is called a merchant card or a catalog card. This card allows you to purchase products from a specific catalog, store, or vender only. If you need an unsecured line of credit only to buy gifts, this type of card can be useful. The danger with unsecured cards is that it can be easy to accrue too much interest debt if you don't pay off balances quickly. However, responsible use of an unsecured ones is one of the best ways to improve credit scores. If your future plans involve buying a home or car, an unsecured credit card can help you achieve loan approval.

Unsecured credit cards range from no perks to cash back bonuses. Which issuer will approve you will be determined after a review of your report. If you have bad credit or bankruptcy, it's not likely you'll get approved for an unsecured credit card. If you don't have perfect or near perfect credit, it's unlikely you'll get approved for a platinum unsecured card. There are other unsecured cards between these two ranges.

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Fair Isaac Credit Score Squeezed By Crunch

On April 29, news broke that Wall Street resulted a shocking 12 percent drop in the well known Fair Isaacs' credit scoring giant. FICO is feeling the affects of the credit crunch, with consumers cutting back on making big purchases, banks tightening on lending, and credit card companies tougher restrictions, are hurting the demands for the credit scores. At the same time FICO pricing is having heavy competition with other credit scoring firms.

Fair Isaac CEO Mark Greene's efforts to improve the automated scoring system, cutting the cost, and reconstructing the sales is not working and has announced that a plan to push out six money eating lines of business.

In early 2006, the companies share fell from $50 to $35 by November, when then CEO Thomas Grudnowski stepped out of his position. Now the shares are less then $25 making times harder for the business due to the exotic trends of the sub-prime lending.

Fair Isaac Corp., is introducing a new and improved product model called FICO 08 that will help address some of the past complaints and flaws in their product. FICO 08 will due better in predicting potential loan defaulting. Supposedly the new system will reduce default rates on consumer debt by 5 to 15 percent by changing:

Authorized Users- The new credit scoring system eliminates "piggybacking" which allows an individual with poor credit or no credit to be an authorized user on an account holder with strong credit to help build credit score.

Delinquency- FICO 08 will be more forgiving to consumers that have occasionally slipped on making payments on certain bills but are still current on the rest of their bills, while coming down harder on repeat offenders.

The scoring criteria will still remain in the range of 300 to 850. The factors that would take into account to determine the scoring will remain the same like payment history, credit history, amount of debt, and the ratio of debt.

Loss Mitigation Leads Loan Modification Secret Tip!

Internet Loss Mitigation Leads

Most loan modification leads are being generated online with banner ads and affiliate websites offering foreclosure prevention help. We have all seen these ads pop up all over the internet in response to the biggest increase of foreclosures in decades. The problem is that these ads are launched on a network of websites that sell the leads over and over decreasing your chance of closing a deal. Internet shoppers tend to be more competitive by nature and it doesn't help when you have 4 other brokers calling the same homeowner. Another problem is that the leads are not qualified and sometimes don't even remember filling out their information. These leads end up being just short of a cold call.

Telemarketed Loan Modification Leads

There is hope however. Call centers that do outbound telemarketing for mortgage companies are in a unique position to provide some of the most responsive telemarketed leads for loss mitigation and loan modification firms. While generating mortgage leads in a call center, thousands of calls must be made each day just to get a handful of qualified mortgage leads. The average conversion is 12,000 phone calls to generate 100 mortgage leads. The reason the ratio is so low is because so few Americans qualify for a traditional refinance these days. So what happens to the other 11,900 people that were contacted about their mortgage? Some of them already have the best rate possible, some were not responsive but the biggest reasons that the leads get disqualified are because their LTV was too high or their credit score was too low and a vast majority of these homeowners are either behind on their payments or currently facing foreclosure. With a few added qualifying questions an appointment can then be set or this new loss mitigation lead can be transferred directly to your office, where a loan modification specialist can take the call right away.

Loss Mitigation Leads

The program is good, not only for the loan modification company but for the call center as well. As the old saying goes, "one man's trash is another man's treasure". Due to the demographics making it easier to generate loss mitigation leads the price is a lot lower as well. Some call centers charge per hour for their telemarketers but since this campaign is not ran as a stand alone process the costs are a lot cheaper. The average exclusive mortgage lead can run up to $95 with filters like 640 and above fico scores and below 70% LTV (loan to value) and and a current interest rate above 7%. These are hard to come by even at $95. Most telemarketed loan modification leads range from $45 to $65 and come with guaranteed criteria filters as well as guaranteed exclusivity.

Why is My Credit Score So Important?

Why is my credit score so important and what does that mean to me? Well it could mean the difference between whether you can get a job, rent an apartment, buy a car or buy a house. If your credit score is poor, it can also mean you'll pay higher interest on everything. It's basically a number that says how effectively you deal with your finances and your life.

First you should know how your FICO score is computed. Your FICO score is comprised of 5 different areas. Your payment history accounts for 35%, amounts currently owed on all your bills accounts for 30%, and the rest is divided up by length of credit history, new types and used.

On the other hand, some things are not included in your credit score Things such as your race, your salary, where you live and your age. So don't feel singled out about these issues as none of them are taken into consideration.

Credit bureaus use a range of 300 to 850 to classify your score so the obvious applies. A score of 300 means it is literally impossible for you to obtain credit If you have a score of 700 to 850 you're considered a good risk so when you obtain credit it will come with a lower interest rate. The average American is thought to be somewhere in the middle.

How can you change your poor score? First you should get rid of your credit cards. Call the customer service number on the back of the card and tell the agent you want this card "closed by consumer." Also request that they send you a letter documenting your conversation. Each time you do this your score will improve. Too many credit cards equal a poor score. Always make your payments on time. As we progress through this country's financial crisis, making a late payment on anything could increase your interest rate to 29.9%. That means your payments will sky rocket. The rules have stiffened so you must take paying your bills on time seriously.

If, for some reason you find your identity has been stolen, report it to all 3 credit bureaus without delay as this will definitely affect your credit score Ask them to flag your account so you won't be responsible for some thief who is recklessly spending all your money. Also, report it to the police immediately and get a police report. That will be important down the line.

Your score good or bad will have an effect on your life. It's important that you know what your credit score means and why you're score is so important. So take it upon yourself to find out exactly what your score is and move forward from there. Take the time to work on improving your score and your life will be that much easier. You also won't have to deal with rejection.

Review Cheap Credit Cards Promotions Before Signing Up

Most folks regularly look for a zero percent transfer credit card because they realize that they can save plenty of cash on interests for their personal loans. On the other hand, there are plenty of "not so streetwise" people that do not make full use of this positive aspect of 0% interest credit cards. It is when they read through their bank statements with someone else that they finally understood what they were losing out. Another slipup these folks commonly make is to quickly terminate all their existing cards and get another 0 percent transfer credit card without comparing the terms or/and charges. In order to prevent falling into such monetary snares, it is best to fully consider all related factors carefully before deciding on the ideal low APR card deals.

If you have never attempted finding out the cheapest rates from different purportedly 0% transfer cards, you will never know that there is a great range in the debt interest rate of credit cards. Some will be approximately 5% while others are exceeding 30%. If you think that 0 APR transfer cards are only available for those of you with above 675 FICO credit history, you are rather wrong. Most credit card issuers formulated low % transfer cards to increase businesses and the introductory offer may decrease to 1%. These deals are generally meant only for a temporary time and you should do it now to qualify for these benefits.

Do not forget to take note of the new finalized debt interest charges after this sales window has ended. Credit card firms cannot upkeep the reduced interest rate at 1% for very long since they are profit-based companies. The overall debt interest charges may lead to more interest charges than what you have been paying previously. Therefore, do not be scammed whenever you get an offer for a 0% transfer credit card. Do not forget to spend a little time to review the terms/conditions and calculate the attainable savings from these low % credit cards.

A point to be careful about is when comparing the debt interest rates from various credit card companies. It is acknowledged that different companies compute their APR figures inconsistently. Check that you add into consideration all such variations to get a fair judgment. Another problem is the wide fluctuations in the surcharges added on late debt payments, which makes comparing credit card offers complicated.

5 Little Known Tips on How Having No Debt Affects Your Credit Score

Can Having No Debt Improve Your Credit Score?

If you have no debt, you should be considered a financially responsible person and a prime candidate for loan acceptance, if you should decide to borrow money for any reason, right?

That depends. If you don't have any debt simply because you have never borrowed any money from a commercial lender, then you also don't have any credit history. And if you don't have any credit history, most lenders will consider you a high-risk prospect because they have no way of knowing how responsibly you handle financial obligations.

FICO Score Effects

But if you have a credit history, and have simply decided to pay off all your debts, your decision will be reflected in your credit score. Your payment history--which for most people is a record of month after month of payments on various accounts--constitutes 35% of your FICO credit score. And you FICO credit score is a major factor in determining how much money you will be able to borrow in the future.

But what if you pay off all your debts, so that your record of monthly payments is suddenly halted in its tracks? What will that do for your FICO score?

Strangely, it will not do much to improve it in the long run.

Why Is Recent Information More Important to a FICO Score?

Your FICO score places much more emphasis on your recent financial transactions than it does on what you may have done in years past. Lenders love to know what you have been up to lately, and if you decide to close out all your loans, they won't have much information at all to help them. You'll still, almost certainly, be paying utility bills, and insurance, but neither of those is considered a long term debt, and in turn not affect your FICO score.

So how can you minimize your debt without minimizing your credit score? Keep a few low-interest, no-annual-fee credit cards open; maintain tiny balances on them; and pay them off each month. Most credit cards have grace periods during which no interest is charged, and if you pay off your purchase each month within those grace periods, you will boost your credit score without building your debt.

Watch Out When Dealing With Old Defaults

You may also be surprised to learn that if you once defaulted on a debt, and now have the financial means and desire,to pay it, doing so can actually hurt your credit score. How? Any time you take action which involves your credit, it shows up as a recent transaction.

Deciding to pay off an old default in your quest for no debt, may make it appear to be a new one, and new problems weigh more heavily against your credit score than old ones. If the default you want to correct is over seven years old, it's more than likely been dropped from your credit report and is no longer used in determining your score. If it's more recent than that, see if the collection agency which was managing it would be willing to agree in writing to remove it from your report before you decide whether or not to pay.

It may not seem sensible that having no debt, or wanting to pay off old ones, can hurt your credit score. But credit is all about what you have done for your creditors lately, so a little or no debt, responsibly managed, will actually look better than none at all.