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Tracy Becker
President
North Shore Advisory, Inc.
155 White Plains Rd. Suite 203
Tarrytown, NY 10591
Co-Author
"The Credit Solutions Kit"
Phone 914-524-8300
Fax 914-524-5014
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Although we, North Shore Advisory, Inc., know a great deal
about how the Fico Score system works and what affects it there is much
that is kept secret. We have come across credit reports, once
in a very long while, where the consumer only has 2-3 lines of credit and
the score has been as high as a 800. Usually having two lines of
credit would deliver a low score. How could this be it is
perplexing? Instead of focusing on what we don’t understand we
have decided to figure out what, for the most part, insures great
scores.
Having a
wide range of credit in your credit portfolio is the way to build an
excellent credit score. We know that the scoring system wants to see
who we are as consumers by viewing our payment patterns. The best way
for them to see us is by reviewing our ability to manage many types of
credit. Revolving, Installment, Mortgages, these types of credit give
the scoring system the ability to predict our risk
level.
Revolving
credit (credit cards, lines of credit) impacts the score the most because
it is the only credit that we have total control over. We can charge
as much as our limit allows and pay as little as the minimum
suggests. Therefore when balances are high on this type of credit the
score plummets downward. Because installment credit (auto loans &
leases, student loans) is always the same amount of payment monthly the
balance ratio, although it hurts when high, does not impact the score as
much.
Mortgages, lines of
credit, overdraft on a checking account, different types of credit cards,
show the score your vast ability to manage credit. But it is
important to know that when you are building your portfolio of credit by
opening new accounts the score will drop until they become seasoned (over a
year or two old). SO PLEASE DO NOT RUN OUT AND OPEN CREDIT IF YOU ARE
APPLYING FOR A LOAN IN THE NEXT YEAR. This is only to be done when
you will not need to open credit for a year or so. No matter
how few or many accounts you have if your balances are high your score will
drop dramatically.
Copyright ©2009 North
Shore Advisory Inc.
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