Credit Education

Credit card utilization, aka “revolving utilization”, is one of the most predictive, andtherefore valuable, measurements in the FICO credit scoring system. In fact, it’s a majorcomponent of FICO’s “Debt Usage” category of characteristics, which is worth 30% ofthe points in your FICO score. The higher your utilization, the ratio of balances to creditlimits, the lower […]

The short answer is, never. The longer, and better, answer is that in general it’s not agood idea to close credit cards except for under a few circumstances. Closing creditcards can cause your credit scores to go down because you lose the value of theunused credit limits, which are important to your scores. The circumstances

I’ve written enough articles about what makes your scores go down to choke a shredder.It’s about time for one about how those scores are actually built. Rather than getting tootechnical, I’ll keep it simple. Credit scoring systems are not random and are not influenced by “common sense.”They are built using statistical methods such as Logistic

Until the beginning of 2011 very few people had ever heard or used the phrase “adverseapproval.” The words just don’t seem to pair well. How can an approval be adverse?The new risk based pricing rules changed all of that and now the two words go togetheras well as “credit” and “card.” An adverse approval occurs

This might have been the question of the year in both 2009 and 2010. Prior to 2009nobody outside the mortgage industry had ever heard of a short sale. But with themortgage crisis still in full swing, everyone has heard the term. A short sale occurs when your mortgage lender agrees to accept less than you

One of the great myths of credit scoring is that closing unused credit card accounts willhelp to improve your scores. The assumption is that having too many unused creditcards hurts your credit scores. And, while that might make common sense, the oppositeis actually what’s true. Having many unused credit cards actually helps your scoresquite a

A credit bureau based credit risk scoring model, more commonly known as a creditscore, is a numeric representation of your credit risk based on a review of theinformation in your credit file. The score is generated by a sophisticated credit scoringmodel, which is made up a series of complex algorithms. The most common creditscoring model

We’ve all requested and reviewed our credit reports and we’re all generally familiarwith what type of information is contained. But, have you ever given any thought asto how that information gets on your credit files? There are three primary sections ofinformation on your credit reports; personal information, public records and accountinformation (collections and credit accounts).