What makes up a credit score?

Fair Isaac uses 22 pieces of data collected from the three major credit bureaus to produce a FICO score with the lowest possible score of 300 and 850 as the highest possible score. There are 5 categories used to determine your score.

• Payment history 35%
• Debt 30%
• Length of Credit history 15%
• New Credit 10%
• Types of Credit used 10%

The two largest factors in obtaining a good credit score is to make sure you pay on time and keep your debt load low. The sad reality is only 13% of all Americans have a FICO score above 800. This means many Americans are paying more money for the exact same items.

Car purchase example:

Very Good Score
Loan amount $35,000
Term: 48 months
Interest Rate: 3%
Payment: $775

Average score
Loan amount $35,000
Term: 48 months
Interest Rate: 9%
Payment: $871

That means the customer with an average score will pay $96 more a month for the exact same car. Over the life of the loan that extra $96 equals $4608 extra!

So what’s next?

Pay on time! Take action to reduce your debt. Don’t just pay the minimum on your credit cards. Get focused and realize the lower your FICO score the more you will pay for items bought with credit or loans. This is like being a second class citizen right here in the Untied States of America. It’s time to fight back.

• Pay on time!
• Take action to reduce your debt. Don’t just pay the minimum on your credit cards.
• Don’t close old accounts.
• Don’t open new lines of credit.

It takes time and discipline to increase or maintain a high credit score, but the cost of not doing so is dramatic. A higher FICO score is in reach. Begin with the four “next steps” listed above and over time your score should improve.

The Tax Deadline is Today!

Ok fellow Americans today is the day we all must file our taxes. So what should you do if you can not complete your returns by today’s deadline? You can always file for an automatic extension. http://www.irs.gov/newsroom/article/0,,id=156073,00.html

What if you are submitting your completed returns today? First off, good job, but remember if you are getting any money back you need to use this money to Crush Your Debt!

See my post from a couple weeks ago. http://www.havegoodcredit.com/blog/tax-time.htm

“Treasury prices sold off Thursday, pushing the 10-year yield above 5% for the first time in nearly four years, after unexpectedly strong retail sales and consumer-sentiment data advanced a case for the Federal Reserve to keep lifting rates”

This is an all time high since 2002. What does this mean to you? Well if you have an ARM then its time to re-finance and get yourself into a fixed rate mortgage. This increase in 10 year bond will force the rates of ARM’s to increase which means your monthly payment will go up. For some it will hurt there budgets some and for others this will be the difference between making your mortgage payment and not.

The good news is if you are a bond investor you can look forward to a more higher return on your investment.

Mortgage rates are going up!

Rates on 30 year mortgage are going up. The rates are at the highest level in 2 ½ years. The financial markets are now very worried about inflation.

Rising mortgage rates have begun too cool the red hot housing market.

If you owe debt in any form things are going to get rough. This is the time to really start to attach your debt and get yourself in a financially secure spot.

Teens struggle with money

“On average, high school seniors answered correctly only 52.4 percent of questions about personal finance and economics, according to a nationwide survey released Wednesday.”

This should be no surprise to anyone. However it should alarm everyone. Kids in high school have more classes about art, physical education, and home economics then they do about real financial economics.

Many school curriculums have roots base in the 1940’s. Times have changed and educating teenagers on finances in needs reform. Education on debt should be a high priority. Let’s not let our kids fall in to the same credit pit falls we have faced in the last 20 years with the ballooning credit card debt.

We also need to address the old myth of save your money. With the average savings account paying less than 1% interest, it can’t keep pace with inflation. Kids need a real education on the new economics of our time.

The study also breaks down along racial and social economic lines.

For instance, 12th-graders from families with incomes greater than $80,000 a year scored an average of 55.6 percent, while students from families at the lowest rung — less than $20,000 a year — had a score of 48.5 percent.

By race, white students scored an average of 55 percent. Blacks and Hispanics scored 44.7 percent and 46.8 percent respectively. Asians scored an average 49.4 percent.

As seen on the Yahoo home page:

Citigroup introduces a new product called e-savings accounts. This savings account will give higher than normal interest rates in an effort to attract more customers.

More customers they can then cross sell them on lines of credit and credit cards! Will a 4% interest rate savings account off set the 17% to 30% credit card rates they charge!

No way!!! Be careful of the true intentions of this offer.

The three major credit reporting companies have come up with the “ultimate” new credit worthiness system. The new name of this system is VantageScore.

Hmmm so now that the credit reporting companies now have to give out copies of the old fico reports free isn’t it interesting they have come up with a new product to sell.

Any way you slice it you can be sure this program is not in favor of the consumer.

Google launches finance Web site

The Good news is you have more choice to get financial info. Move over Yahoo and MSN Google has launched their own site.

The site is in beta and is in the no frills style Google is known for… You may want to check it out: http://finance.google.com/finance

If you are looking for REO listings I have found a Free source. It’s provided by Countrywide, one of the largest Morgtage lenders in the U.S.A. CountryWide has made their searchable database open to the public. There are hundres of properties so take a look and see if anything is in your area.

http://www.countrywide.com/purchase/f_reo.asp

Minimum Credit Card Payments are going up. Yes the pain will be felt world wide on this one.

New federal guidelines that require significantly increased monthly minimum payments will hit second half of this year. What does this mean to you as someone who carries a balance? Your minimum payment will go up. But let me give you more details…

How does this affect the borrower and the bank?
You monthly payment goes up. This means if you can barely make your minimum payment now, it will get much harder to make the minimum payment in the very near future.

Banks don’t like this not because it will force more people to pay off their debt faster but because it will mean more people will default on paying there debt.

“Banks will not only have increased losses, but reduced revenue as well,”

So please if you can start paying off your credit cards as soon as you can. Don’t let this new law force you over the edge into Bankruptcy.