Get to Know Your Credit Score Ohio
You live in Ohio, perhaps Cleveland or Akron. On a random Tuesday you get a credit card offer in the mail, probably one of dozens you get regularly. The card promises a great rate on balance transfers so you decide to apply online for a "sixty second decision." You wait anxiously for what seems like far more than sixty seconds while staring off into space and thinking about what you will use your new card for. Sadly, when you look back at the screen you see a notification saying "I'm sorry, you could not be approved at this time."
Time to check your credit score and find out why. For information on where to get your credit report, check out this earlier blog entry
The most widely used credit score is a "FICO score," named after the Fair Isaac Corporation that created it. The FICO score is a three digit number (ranging from 300 to 850) intended to gauge a person's creditworthiness when they apply for credit.
The FICO score, according to Fair Isaac Corporation, is composed of several different factors that are weighted as follows:
• 35% is based upon timely payment to a lender that reports to one of the three
major consumer credit bureaus.
• 30% is based upon the amount you owe or the amount of available credit you
have vs. the balances you carry (i.e., if your credit cards are all “maxed-out” this
part of your score will be low).
• 15% simply reflects the length of your credit history, with a longer history being
preferable because it shows lenders your track record.
• 10% represents the type of credit used, such as student loans, credit cards, car
loan, mortgage, etc.
• 10% represents new credit, how many accounts you've applied for and/or
opened recently.
If you are denied credit, you will be mailed a written statement citing the reasons you were declined. The notice will also state that you can obtain a free credit report and you should take advantage of the opportunity to review your credit report. When you do, use the information above to see what you can do to improve your score. You should also check for any inaccurate information such as accounts that are more than seven years old that should be removed, closed accounts that are still being reported as opened, or information that does not pertain to you. In general, it is a good idea to review your credit report at least once a year so you are not unpleasantly surprised when you need credit. You can obtain a free credit report once a year at AnnualCreditReport.com.
