How can I REALLY understand my credit worthiness?
Posted in Credit on 09/05/2010 05:52 am by admin
A few months ago, I inquired with my bank about some options for an auto loan (which I ended up not needing, thankfully). At the time, the loan rep said that my Experian credit score came back to them as 0.
This didn’t make sense to me, since I was holding a freecreditreport.com report, that showed numbers from all three agencies, averaging about 660, and within ten points of each other. Also, my two most recent credit accounts were with this very same bank.
I tried getting numbers from FICO, but they can’t issue a report to me, since I don’t have any open accounts, and my most recent accounts were closed more than six months ago.
All the experts say I should know my credit score, in order to be an intelligent consumer. But how can I possibly really know it, if the agencies are reporting one thing to me, and something else to the lending agencies?
Do I really have to be stupid enough to continue paying interest, in order to get more credit? It seems to me that living within my means should show that I’m smart enough to be worthy of getting a loan.
I’m confused and frustrated. How can I really be smart about what I’m doing, if I can’t get straight answers?
But I DO have debt and payment history. I simply got rid of the debt, and haven’t needed credit lately.
My last two car loans have been from this same bank. The last loan was paid off in April of 2008…I guess just long enough ago that FICO won’t look for it. (?) That’s really stupid. (Grrr).
Eva
09/05/2010 at 10:52 pm
Roland
Go to Clark Howard.com, this is not spam, he is a consumer advocate, and his website has a ton of information that will explain it better than I ever could here. He has a radio show and does spots on CNN.
09/08/2010 at 1:03 am
Peggy
I understand it is frustrating but the way the FICO system works is that to maintain a good high score you must also maintain debt and payments.
For most people this is not a real problem they have vehicle loans, home mortgages and credit cards (paid in full every month) and the combination of all of these maintains a great FICO score.
On the other hand people that live by paying cash for everything while setting a great example do not tend to have good credit scores since they have no debt or payment history.
This is why some people refer to the FICO score as the “I love debt score”.
By the way so you will know scores are based on the following factors;
1. Payment history (longer the better) 35%
2. Time in bureau (longer the better) 15%
3. Types of credit (mix of revolving & installment) 10%
4. New credit (inquiries & new accounts) 10%
5. Debt to credit ratio (lower the better) 30%
And to have the best score and profile people need 3-4 credit card accounts (revolving) with balances below 30% of their limits and 2 cars, boats, motorcycles, homes, computers, furniture or personal accounts (installment) all with good long pay history’s.
One thing I don’t understand is credit scores are 90% based on the last 24-months of activity so if you have accounts that were closed just 6-months ago you should still have a score.
Additional information.
If what you say is true and your bank reports to the credit bureaus (some small banks don’t) you should still have a decent credit score. Did you try my FICO.com for your socres?
09/10/2010 at 6:53 pm
Melanie
Actually there is a big difference in credit scores reported by freecreditreport.com or anything similar to it compare to companies who pull your credit to qualify you for a loan. sometimes there’s a big difference… I don’t know why, but I have done that a number of times for myself, family and a few clients and there’s a big difference.
The numbers that your auto loan people tell you are real numbers.
So I find those freecreditreport, privacy matters, so & so unreliable.. when it comes to knowing exactly what is your credit score.