Re: I'm a 19 year old college kid, with a couple credit issues...help!

Posted by christine (24.244.136.198) on May 30, 2002 at 12:30:30:

In Reply to: I'm a 19 year old college kid, with a couple credit issues...help! posted by Jason M. on May 30, 2002 at 12:15:22:

I can't believe that young people of today no nothing about credit.

Jason, does your father know that you have been late on two occasions now? Do you know that this derogatory information is being reported on his credit reports as well, since he co-signed.
Also every you apply for credit they do what is called an inquiry to your credit reports, each time this happens your credit score drops. This hard inquiries stay for two years on your reports.
I think you need to get educated on credit, read this article on FICO scores and order your free credit reports today. Since you have been declined credit your entitled to free reports from all three CRA's Trans Union, Experian and Equifax.
Your Credit Report And FICO Scores

Your FICO score is one of the most important factors in your loan process. Here are some FICO Facts you should know about:
1. A FICO score is a standardized ranking generated by the three credit reporting agencies, based on your credit history. To make the loan process fair for everyone involved, lenders use the the middle FICO score to determine which loans and rates you will qualify for.The formula used to compute these FICO score is not disclosed by the credit bureaus, per decisions made by the U.S. Congress.So none knows how its made up and what a consumer can do to enhance the
score

2. Simply put, the better your credit is, the higher your FICO score will be, and that translates into cheaper loans. Currently, a minimum score of 620 enables you to get an "A" grade loan, a score of at least 640 gets you the elusive 125% loan, and with a score of 700 and above, your loan choices are nearly unlimited.

3. BEWARE: Every time your credit report is accessed, or "run", your FICO score drops 8 to 20 points! This change in your score can drastically affect the type of the loan you qualify for, the cost of that loan, or even make your FICO so low that you no longer qualify for the loan you started out with!

4. It is possible to correct errors in your credit report, though it does take time and effort on your part.Click to see how you can improve your FICO scores by using the Fair Credit Reporting Act.

Understanding Credit Bureau (FICO) Scores

A credit score is a number between 350 and 850. This is calculated based on approximately 45 different factors from an individual's credit profile. The score is intended to indicate an individual's credit worthiness. The higher the score the better. The three major credit repositories have slightly different data on each person. So, the credit scores from the three repositories are usually different.

Credit scores are frequently referred to as FICO scores, because they are based on scoring models developed by the Fair, Isaac Company. Each credit repository has their own name for a credit score. Equifax calls it a Beacon Score, Experian calls it a FICO Score, and Trans Union calls it an Empirica Score.

Credit Scores are changed by changing the credit data. The score is a function of the data found in an individual's credit profile. There is no way to directly change a score.

Every consumer begins with a perfect 850 score before the credit data is sent through a credit scoring model. The model takes different factors from an individual's credit profile and reduces the score. The factors used to reduce the score may not necessarily be derogatory information. For example, having too many open credit cards accounts is not derogatory information. However, there is the potential that a person could charge more on their credit cards than they can pay off. This potential risk lowers a credit score.

Score Factors. A credit score is accompanied by four score factors. These factors are the four most important reasons the score has been reduced from the perfect 850 score. These are the four most important issues a consumer should look at in trying to improve a credit score. For example, someone with too many credit cards should close any unused accounts. Unfortunately, there is no way to know how many accounts must be closed in order to raise a credit score.

Another way to change a credit score is to dispute incorrect credit data with a credit repository. How to Dispute Credit Information with the Repositories.

More information about FICO scores. The Fair, Isaac Company-- in conjunction with the three major credit repositories-- worked together in the late 1980's to create a scoring system that could be used to rank potential borrowers based on the likelihood that they would pay their credit obligations. In order to accomplish this they compiled a sampling of over a million credit files with a variety of different credit histories. Using these files they were able to identify certain consistencies among the consumers that were remiss in paying their debts. They isolated approximately 45 factors within a credit profile that could be used to calculate a score that would allow a quantifiable comparison between borrowers. Each of the factors was given a different weighting based on its importance as an indicator of delinquent payment behavior.

In creating the FICO score, the Fair, Isaac Company and the three credit repositories intended to offer lenders a new tool in evaluating perspective borrowers. The score a borrower receives is merely an indicator and should be used by the lender in conjunction with the entire credit profile and other outside factors.

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