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ICFE eNEWS #19-02 - January 21st 2019

Credit Scores - How Are They Figured?

By Jim Garnett, a/k/a Ask Mr.G, a member of the ICFE's Board of Educational Advisors

How Is My Credit Score Figured?

Your credit score is calculated from five basic categories. The percentages reflect how important each category is in determining your score.
Credit score chart 
35% Payment History. As you can see, this is a very important factor. This is because lenders tend to believe that the way you have handled credit in the past will predict how you will handle credit in the future.

30% Amounts Presently Owed. This category includes such things as how much do you owe on your house or your car, the number of accounts with balances, and the proportion of credit limits used. A good rule of thumb is to keep you credit card balances at no more than 30% of their credit limits (a wiser plan is to carry no balance on your cards at all!).

15% Length of Credit History. This data includes not only the amount of time you been using credit, but how long each account has been opened. The longer "track record" you have in using credit wisely, the more credit worthy you will be.

10% New Credit. This would include the number and type of recently opened accounts and the number and timing of recent credit inquiries.

10% Types of Credit Used. This category contains information on the number of loans and available credit from credit cards.

Remember that your credit score takes all these categories into consideration, not just one or two of them. The importance of any separate factor, good or bad, depends largely upon how it is viewed in relationship to your overall report. There also are alternate ways to show your credit worthiness like faithful payments on utility bills, rent, consumer credit agency payments, etc. that do not reflect on your credit score because they are not reported to the credit bureaus.

Preview Jim's latest book, "The Nuts and Bolts of Cash and Credit: An Encyclopedia of Financial Knowledge"

Ask Mr. G
Jim Garnett, The Debt Doctor
AskMrG Consulting, LLC
2216 SW 35th Street
Ankeny, IA 50023

Paul S Richard PhotoICFE eNEWS is available FREE upon request by visiting our Web site and filling out the contact form, and selecting "Yes" for "Add to Mailing List. Please pass this eNEWS on to your peers and interested others and invite them to subscribe for free. Also, visit the ICFE's new Web site: StudentDebtHelp.org

Sent by:

Paul S. Richard
President - Executive Director
Institute of Consumer Financial Education (ICFE)

About the ICFE:

The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation and founder of the College for Financial Planning in Denver, CO.) The ICFE is dedicated to helping consumers of all ages to improve their spending practices, increase savings and use credit more wisely.

The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its financial continuing education courses programs and resources. In addition to eight Certification courses covering identity theft, credit files, credit repair and credit scoring, among others, it also publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.

The ICFE is a partner with the national Jump$tart Coalition for Financial Literacy and the California Jump$tart chapter. The ICFE staff is also active with San Diego Saves and Military Saves, both offshoots of America Saves.

The ICFE is also an on-line help for consumers who spend too much. ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.

The ICFE helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G library, a free eNews service, and an online resource center for students, parents and educators, plus financial education learning tools in the ICFE Book Store.

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