A few months ago, we shared Five FICO Score Factors Your Members Need to Know. Many of our readers posted this information in their newsletter and requested more member education articles. Our readers' requests support some frightening statistics.
A recent survey by Credit.com Educational Services in San Francisco shows that about 97% of people have no idea what their credit scores are, and 86% did not check their reports in 2006 despite it being free. This week, I invite you to share with members more information about their credit scores.
First, members should know what a FICO score ignores:
- Demographic Profile: Race, color, religion, age, national origin, sex, marital status
- Employment: Salary, occupation, title, employer, date employed, employment history
- Current Interest Rate: Any interest rate being charged on any loan on your credit report
- Credit Counseling: Any participation in a credit counseling service of any type
- Types of Inquiries:
- “Consumer-initiated” – requests you make to check its validity
- “Soft” – promotional inquiries made my lenders to make a pre-approved credit offer <
- “Administrative” – inquiries made by lenders to review your account with them
- “Employer” – Inquiries that are marked as coming from employers
Second, members should understand what items will negatively impact their FICO score:
- Late payments and derogatory public records
- A low level of “percent available” on individual revolving accounts* and total revolving accounts
- Closing revolving accounts (especially those that have been open a long time)
- Having a lender lower the limit on a revolving account or not report the limit on a revolving account
- Multiple new accounts in a short period of time
- Making payments on old (more than seven years) bad debts
- Having loans at “second tier” finance companies
If you would like to re-post information from this article, please cite Callahan and Associates, the author’s name, and Brett Christensen as sources. This information is excerpted from the training webinar, The Number One Member Education Opportunity, hosted by Brett Christensen and sponsored by Callahan and Associates. For complete information, click here.
*Revolving Account - Requires a specified minimum payment each month, provides a maximum amount that you can charge and allows you to carry a balance. Major credit cards are an example.