Credit Bureaus Gathering More Info on Consumers to Sell to Lenders

The WSJ reports that credit bureaus and Fair Isaac are beginning to sell new types of financial information to banks for purposes of evaluating credit applications. The bureaus are offering to report on your rent and utility payments, income, home’s value, and evaluate your banking activities. Fair Isaac, who invented the FICO credit score will report on customers’ bank deposits, balances, and withdrawals. The credit bureaus are estimating customers’ income something the Federal Reserve allows lenders to do in order to satisfy new requirements that credit-card applicants show the ability to pay their debts. The bureaus look at your credit...

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Credit Card Companies Are Now Canceling Cards Due to Not Enough Use!

Charging too much on your credit cards is a good way to get into financial trouble. So, in this economic climate, it’s best to keep those cards in your wallet, right According to an article in MSN Money, not necessarily so. Banks are apparently taking a hard look at customers who don’t use their credit cards — or who don’t use them anough — and simply canceling those cards. The banks reason that closing rarely-used accounts lowers their risk profile, because getting rid of unused accounts limits the bank’s liabilities (potential available credit) compared to the bank’s assets. Also, simply...

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The Five Components of Your FICO Credit Score

Your credit score, also often referred to as a FICO score, is a three-digit number that is designed to gauge your creditworthiness. Lenders use it to assign interest rates on things such as auto loans, mortgages and credit cards, among other borrowings. The score, called FICO, ranges from 300-850 and is calculated by Fair Isaac Corp. using information from the three major credit reporting agencies: Equifax Inc., Experian, and TransUnion. On 12/31/08, the Wall Street Journal reported that Fair Isaac states that a credit score is made up of five components: * 35% reflects payment history: whether or not you...

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Inquiries & their Effect on Your Credit Score

When a consumer seeks credit, the lender will report an inquiry on the consumer’s credit reports. When a bank sends out a pre-approved loan application or makes an account review, the bank reports that event as an inquiry. The former inquiries are known as hard inquiries and the latter as soft inquiries. Consumers reading their reports worry the inquiries are reducing their credit scores. However, the soft inquiries do not affect credit scores at all and the hard inquiries lower credit scores but not very much. For most people, one additional hard inquiry will takes less than five points off...

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New Credit Score Formula for 2008

Credit scores are determined using formulas designed to predict how likely a consumer will pay his or her bills. Fair Isaac is the leader having created the FICO credit-scoring formula. Fair Isaac has announced its formula will be revised this year. The new formula will deemphasize the effect of one late payment on your credit score on an otherwise unblemished record. Fair Isaac states the company’s analysts pulled reports of 5 million consumers to see how their credit profiles fared over time. More information may be found in a recent issue of SmartMoney magazine.

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