You know, it’s funny how credit and credit scores affect Consumers’ lives more than just about anything else in life, and yet very few people understand just how credit scores work and what factors go into your credit score.

Growing up, I remember my father had great credit, even though he had very little credit. Like most folks raised during the Great Depression, my dad paid for most things with cash, normally only financing big ticket items related to his business.  About the only credit knowledge he passed down to me was “Pay your bills on time.”

If you think about it, almost all of us learn about credit in the “School of Hard Knocks.”  While we may learn how to balance a checkbook or make a budget in school, I don’t know of one school that really teaches students about credit and credit scores.  Is it any wonder that so many of us have bad credit?

If you read my earlier post Credit Score Confusion, you are aware that there are several different types of credit reports and scoring modules.  The most popular and widely used of all these scoring modules is what’s known as the FICO^® score.  FICO^® derives its name from the Fair Isaac Company, which has been in business since 1956.  Since your FICO^® scores are what most lenders use to determine your credit-worthiness, today we will be looking at how your FICO^® scores are calculated.

In researching information and preparing for this article, I came across a new (or new to me) website: www.ScoreInfo.org.  I can honestly say this is the best, most comprehensive site for everything FICO^® that I’ve ever seen.  So, instead of giving you my 2 cents, I’m going to point you to some pages at ScoreInfo that I think will help you better understand and make sense of your credit scores.

• FICO^® Credit Score Ingredients – Explains in detail what factors go into your FICO^® scores.
• What Your FICO^® Score Means – Details what your scores mean in relation to credit decisions.

There are literally dozens of pages with a wealth of knowledge to be found at ScoreInfo.org.  Be sure and check out all of the articles that may interest you.  When it comes to credit, the more you know, the better opportunity you have to have the highest possible credit scores!

DAMAGE POINTS

We get a lot of questions from Clients wanting to know just how many points a certain derogatory action may cost their credit scores.  I’ve even had Clients tell me that late payments don’t affect credit scores!  In the chart below, you will find out just how many points various credit mistakes affect your credit scores.  This information was provided by FICO^®.

I hope this information has been helpful.  If you have any questions or comments, please feel free to contact me personally or reply on this blog.

Regards,

Brad Boruk
FCRA-Certified Credit Strategist
National Credit Solutions
214 504-7101

We Americans tend to take most things for granted.  A friend sent me an article which appeared on the Twin Cities Star Tribune website entitled “That truck driver you flipped off?  Let me tell you his story.”   I can’t add a whole lot to this except, after reading this article, hopefully we can all have more understanding and compassion for the job that truck drivers do.

That truck driver you flipped off?  Let me tell you his story.

Let me tell you a little about the truck driver you just flipped off because he was passing another truck, and you had to cancel the cruise control and slow down until he completed the pass and moved back over.

His truck is governed to 68 miles an hour, because the company he leases it from believes it keeps him and the public and the equipment safer.

The truck he passed was probably running under 65 mph to conserve fuel. You see, the best these trucks do for fuel economy is about 8 miles per gallon. With fuel at almost $4 per gallon — well, you do the math. And, yes, that driver pays for his own fuel.

He needs to be 1,014 miles from where he loaded in two days. And he can’t fudge his federally mandated driver log, because he no longer does it on paper; he is logged electronically.

He can drive 11 hours in a 14-hour period; then he must take a 10-hour break. And considering that the shipper where he loaded held him up for five hours because it is understaffed, he now needs to run without stopping for lunch and dinner breaks.

If he misses his delivery appointment, he will be rescheduled for the next day, because the receiver has booked its docks solid (and has cut staff to a minimum). That means the driver sits, losing 500-plus miles for the week.

Which means his profit will be cut, and he will take less money home to his family. Most of these guys are gone 10 days, and home for a day and a half, and take home an average of $500 a week if everything goes well.

You can’t tell by looking at him, but two hours ago he took a call informing him that his only sister was involved in a car accident, and though everything possible was done to save her, she died. They had flown her to a trauma hospital in Detroit, but it was too late.

He hadn’t seen her since last Christmas, but they talked on the phone every week. The load he is pulling is going to Atlanta, and he will probably not be able to get to the funeral.

His dispatcher will do everything possible to get him there, but the chances are slim. So he has hardly noticed your displeasure at having to slow down for him. It’s not that he doesn’t care; he’s just numb.

Everything you buy at the store and everything you order online moves by truck. Planes and trains can’t get it to your house or grocery store. We are dependent on trucks to move product from the airport and the rail yards to the stores and our homes.

Every day, experienced and qualified drivers give it up because the government, the traffic and the greedy companies involved in trucking have drained their enthusiasm for this life.

They take a job at a factory if they can find it, and are replaced by an inexperienced youngster dreaming of the open road. This inexperience leads to late deliveries, causing shortages and higher prices at the store, and crashes that lead to unnecessary deaths.

It is even possible that is what led to the death of this driver’s sister.

This is a true story; it happened last week. The driver’s name is Harold, and I am his dispatcher.

Dan Hanson, of Belle Plaine, Minn., is a fleet manager.

You can view this article on the Star Tribune website here:  Star Tribune

Thanks to all you truckers out there that keep our country going.

Brad Boruk
The Credit Guy
National Credit Solutions
214 504-7101

There seems to be a lot of confusion today about credit scores.  Most of this confusion seems to primarily center around two things:  1)  consumer report scores differentiating from mortgage scores and auto-enhanced scores, and 2)  what factors influence credit scores.  It sometimes seems that the consumer is purposely being kept in the dark.

Today, we’re going to take a look at the different types of credit reports and credit scores.   While numerous types of credit reports exist (many of them are specialty reports), there are three basic types of reports: Consumer Reports, Mortgage Reports and Auto-Enhanced Reports.  Here is a brief description of each:

Consumer Reports:  This type of report is a great resource for consumers to monitor their credit.  Consumers are entitled to one free credit report per year (this can vary depending on the state in which the consumer resides) and are available at AnnualCreditReport.com.  When you pull this type of report, it’s considered a “soft” inquiry that won’t affect your credit scores; however, you typically can’t purchase goods or services with a Consumer Report.

Mortgage Reports:  This is report that your mortgage loan officer would use to make a credit decision when you are purchasing or refinancing a home.  This report normally contains the most thorough details, along with resource codes that spell out what factors are having the greatest effect on your credit scores.  This type of credit pull is considered a “hard” inquiry and can affect your credit scores.

Auto-Enhanced Reports:  When you go to an automobile dealership, this is the report that the finance department will use to determine your credit worthiness to purchase or lease a vehicle.  As the name implies, the scores are enhanced based on your previous automobile payment history.  If you have an excellent car payment history, your scores on this report will probably be higher than on the other reports.  Conversely, if you have a poor car payment history, these scores may be lower than on the other reports.  Because the purpose of pulling this report is to purchase a vehicle, this is also considered a “hard” inquiry and may affect your credit scores.

A few years ago, the Washington Post had an excellent article explaining that these three types of scores can vary by as much as 200 points!  While I’ve personally never seen this much of a discrepancy, I have seen these scores vary by as much as 90 to 100 points.  The good news is, the US Government has put the Fair Access to Credit Scores Act of  2010 in place to ensure that consumers now have access to various credit reports and credit scores if they were denied credit.  You can find more details of this act at the SmartCredit.com Blog.

I hope this helps clear up some of the confusion that consumers face when confronted with different types of credit reports and credit scores.  In the near future, I will be discussing what factors actually affect your credit scores, and what those affects are.

If you have any questions regarding your credit scores or your credit situation and would like to visit with someone, please feel free to personally contact me, Brad Boruk, at 214 504-7101.

Brad Boruk
FCRA-Certified Credit Strategist
National Credit Solutions
214 504-7101