How are my credit scores calculated?

Auto Insurance Comparison

This quote is based on the following assumptions: Commuter Driver, No Tickets / Accidents, Liability (100/300/100), PIP (5000), OTC Deductible (500), Collision Deductible (500), Monthly Premium

Home Owners Insurance Comparison

 

This quote is based on the following assumptions: New Home, Asphalt Shingle Roof, 2 Car Garage, No Previous Claims, HOA Policy, Annual Premium

What types of information are NOT used in calculating my BEACON®, FICO® and EMPIRICA® score?

• Your race, color, religion, national origin, sex or marital status
• Your age
• Your salary, occupation, title, employer, date employed or employment history
• Where you live
• Certain types of inquiries such as promotional, account review, insurance or employment related inquiries
• Any information not found in your credit file
• Any information that is not proven to be a predictive of future credit performance

To give lenders a broad view of your credit history, the BEACON®, FICO® and EMPIRICA® score takes into consideration both positive and negative information from all five categories. Your BEACON®, FICO® and EMPIRICA® score changes when information is added, changed or removed on your credit report.

Although each credit reporting agency formats and reports credit information differently, all credit reports contain basically the same categories of information.

When a lender receives your BEACON®, FICO® and EMPIRICA® score, up to four score factors are also delivered. These explain the top reasons why your BEACON®, FICO® and EMPIRICA® score was not higher. If the lender rejects your request for credit and your BEACON®, FICO® and EMPIRICA® score was part of the grounds for his/her decision, score factors help the lender tell you why your score wasn't higher.

Score factors are useful in helping you determine whether your credit report might contain errors, as well as how you might improve your score over time. However, if you already have a high BEACON®, FICO® and EMPIRICA® score (usually in the mid-700s or higher), score factors may not be as helpful, since they represent very marginal areas where you could improve your score.

Please bear in mind that the ordering of the score factors is important. The first code indicates the area where you lost the most points, the second code is where you lost the second most points, and so on. In other words, concentrate on the first one or two score factors. The third and fourth factors (if present) are not as significant.

Ask your lender how you can improve your credit picture, if your credit application was turned down or you didn't qualify for the interest rate you wanted. If you have been turned down for credit, the Equal Credit Opportunity Act (ECOA) gives you the right to obtain the reasons why within 30 days. You are also entitled to a free copy of your credit bureau report within 60 days, which you can request from the credit reporting agencies.

If the BEACON®, FICO® and EMPIRICA® score was a primary part of the lender's decision not to extend credit to you, the lender can use score factors to explain why your score was not higher. Lenders often may not tell you your score because score factors are usually more useful in explaining how you can improve your credit quality over time. Lenders are not required to disclose your score, but you can ask.

If you live in California, a new state law effective July 1, 2001 requires credit reporting agencies such as Equifax to make credit scores available via U.S. Mail to Californians upon request. If you are a resident of California and you are interested in obtaining your score please contact Equifax at (800) 685-1111 or at http://www.econsumer.equifax.com/

Your BEACON®, FICO® and EMPIRICA® score takes into account how much of your total credit line is being used on credit cards and other revolving credit accounts. Someone who is closer to "maxing out" on many credit cards or has large amounts of outstanding debt may have trouble making payments in the future, and this is reflected in the BEACON®, FICO® and EMPIRICA® score calculation.

The most effective ways to improve your BEACON®, FICO® and EMPIRICA® score in this area are:

·         Pay all bills on time

·         Pay down your debt rather than moving it around

·         Don't close unused credit cards as a short-term strategy to raise your FICO score.

·         Don't open new credit cards for the purpose of increasing your available credit.

The rules regarding how long the bureaus generally keep information on credit accounts are as follows:

Credit Accounts:

Accounts paid as agreed remain for up to 10 years.

Accounts not paid as agreed remain for 7 years.

Collection Accounts:

Remain for 7 years.

The time periods listed above are measured from the date in your credit file shown in the "date of last activity" field accompanying the particular credit or collection account.

Courthouse Records:

Remain for 7 years from the date filed except:

Bankruptcy - Chapters 7 and 11: remain 10 years from date filed.

Bankruptcy - Chapter 13 non-dismissed or non-discharged remains 10 years from the date filed.

Unpaid tax liens remain indefinitely.

Paid tax liens remain for up to 7 years from the date released.