About Your Credit Score

Do you know your credit score?  Do you even know what a credit score is? Any time you apply for credit - for a car loan, a home mortgage or a credit card, for example - the potential lender needs to decide whether to lend you money.  The lender needs to assess how large a risk you present for not making your monthly payments on time .

Your personal credit score summarizes the risk you present to a lender, often expressed as a number between 300 and 900.  A higher number represents a better credit history and a lower risk.  This could mean your being offered a lower interest rate, and monthly payments, than another applicant with a lower credit score.

What are the ingredients of your credit score?

There are several factors that determine your credit score?

• 35% is based on how you pay your bills.  Paying bills late lowers your score, as does declaring bankruptcy.  The more recent these events have occurred, the greater effect on your score.

• 30% is based on your outstanding debt.  The total you owe on credit cards, car loans, mortgages, credit lines, etc. is considered, along with the total amount of credit you have available.  Lower balances result in a higher credit score.

• 15% is based on your length of credit history. The longer you8 have had credit, the better. A longer history with more information about past payments establishes a more accurate picture.

• 10% is based on new activity. A lot of recent credit inquiries or applications could indicate that are in financial difficulty or assuming a lot of new debt.  That's one reason Atlantic Funding does not request an updated copy of your credit report without coordinating this with you; we understand that multiple inquiries can have an effect on your credit score.

• 10% is based on your types of credit.  A healthy mix of accounts including revolving credit, like credit cards, installment credit, like auto and mortgage loans, results in a better score. This tells the potential lender that you have experience with a wider variety of credit and a further indication of financial responsibility.

According to Fair Isaac, the company that developed the credit score, individuals fall into the credit score rankings listed below:

source: www.bankrate.com

Trans Union LLC PO Box 1000 Chester, PA 19022 866-887-2673 www.transunion.com	Experian PO Box 2002 Allen, TX 75013 888-397-3742 www.experian.com/reportaccess	Equifax Information Service, LLC PO Box 740341 Atlanta, GA 30374 800-685-1111 www.equifax.com

A tri merge credit report will show scores from all 3 credit bureaus. If you are applying for a mortgage then the mortgage lender will use your middle score to determine rate and terms of your loan.

Each of the three credit bureaus comes up with a different score to reflect your credit profile. A tri-merge score reports all three scores and the middle score is used. A single FICO score is not as accurate because it may be higher or lower than the tri-merge middle score.

A single score credit report is good to give you a general overview of your credit. But keep in mind not all companies report to all three credit bureaus so by only obtaining a single score you could be missing some accounts or information that you would see on a tri merge report.

Most of the time a tri-merge score credit report is more highly recommended than a single score credit report. A tri-merge score credit report will give you the most detail about everything that is reporting to your credit and you will also be able to see any discrepancies or differences between the 3 credit bureaus between what is and what is not being reported to your credit.

If you have 1 or more credit scores which are significantly disparate from your other score(s), you can check to see if each credit bureau is reporting all of your updated credit information. Many times, 1 bureau will have updated a previously delinquent account while the other bureaus have not.

Fair Isaac and Company, issuer of FICO scores, provides a list of reasons why your score is not higher based on the snapshot fed into the computerized scoring model. Each of the credit bureaus determine how important those reasons are, so even identical information from each of the credit reporting agencies can result in different scores.

Also keep in mind that Credit inquiries count for 10% of your total credit score. When applying for new credit, every point on your credit report can make a big difference. So, do not start shopping your credit until you are ready to act.