1. The CREDIT SCORE
“Classic FICO”

2. What Does The Score Mean?
Predicts the statistical chance of a consumer becoming 90 days late or more on a particular loan obligation over the next 24 months
The score is generated by analyzing the information contained in the consumer’s credit report at that point in time. Makes credit repair valuable!
Only available for the three Bureaus, not Innovus, the 4th Bureau

3. To Have a Credit Score
>Have an account that is at least 6 months old and also has been updated in the past 6 months and not be under dispute
FICO was going to switch to 3/12 but due to lender feedback kept 6/6 (Next Gen still 3/12)
>Not be deceased
>Size parameters in older models have caused zero

4. Consumer Default: What Are The Odds?
CREDIT SCORE
Consumer Default: What Are The Odds?

5. Score Odds Above 800 1485 to 1 720 to 799 649 to 1 680 to 719 112 to 1
Odds of a person getting a major derogatory over the next 24 months
Score
Above 800
720 to 799
680 to 719
620 to 679
Below 620
Odds
1485 to 1
649 to 1
112 to 1
47 to 1
15 to 1

6. How Long Do Delinquencies Stay
CREDIT SCORE
How Long Do Delinquencies Stay

7. Delinquencies on Credit Reports
Bankruptcies Chapter 7 & Years From Filing Date
Trans Union Policy is to remove Ch. 13 after 7 years
Tax Liens 7 Years From Date Satisfied
Late Payments 7 Years
Charge-Offs Years From 1st Late Pay
Judgments 7 Years or S.O.L.
Inquiries 2 Years
Collections Cannot be Re-Aged due to change of ownership or a payment being made ( although it happens )

8. How long does an account included in BK stay?
Flash Quiz
How long does an account included in BK stay?

9. What Are The Determining Factors?
CREDIT SCORE
What Are The Determining Factors?

10. 1. Payment History
35% of Credit Score

11. Key Issues Past due the day after the due date
30 days late on the report is really 1-30 days late.
Paying a Tax Lien or a Collection will not increase the score much at all ( MAY DECREASE IT )
Included in BK just as bad as Foreclosure, Charge-off, 90 day, 120 day etc.

12. Key Issues ( cont )
Bureaus are now required to mark all delinquent accounts that were in collection or charge-off as being included in BK. Only the creditor was required before 2008
IN SUMMARY – Pay your bills on time, don’t get sued and lose and pay your taxes.

13. Which single item below hurts the score the most?
Flash Quiz
Which single item below hurts the score the most?
Dismissed Chapter 7 BK
Charged off credit card with a $10,000 delinquent balance that’s included in BK
Foreclosure
Judgment
Discharged Chapter 13

14. 2. Revolving Debt Ratio…
30% of Credit Score
30%

15. Key Issues
Revolving is what's important, installment are a very small factor
Pay as close to zero as possible
Pay before the due date when score boost is needed. PLAY THE GAME IF YOU HAVE TIME
Spreading balances is harmless advice even though newer FICO versions don’t reward it (same goes for under 30% threshold advice)
AU has done wonders in this area

16. Effect on the Score by Type
Secured and Unsecured credit cards are the same effect
Visa, MasterCard & Department Store the same
$300 limit at zero has same effect as $25K at zero
American Express that is “not” revolving ( “Open” ) is the same as a revolving except the limit is assumed to be the high credit OR it is bypassed completely if no high credit is shown
Joint accounts are never a good idea unless needed to get approved.
Try to separate now

17. Exceeding Limit or Original Amount
Slight boost on Revolving
Slight decrease on Installment
i.e. Negative Amortization Loan
Being Maxed is the key issue, the rest is a small factor

18. 3. Average Age of Credit File…
15% of Credit Score
15%

19. Average Age
The older the better
Don’t close cards
AU still helps

20. 4. The Mix of Credit…
10% of Credit Score
10%

21. Healthy Mix is Best 3 to 5 revolving cards 1 Auto 1 Mortgage
Don’t get caught up on this
1 Auto
1 Mortgage
One mortgage from zero increases the score

22. 5. Inquiries…
10% of Credit Score
10%

23. Inquiries
Personal, Promotional, Account Review and Insurance Inquiries don’t count
Only 1st ten may be bad advice! Oops!!!
De-duplication of Mortgage & Auto
45 day window with a 30 day buffer
Mortgage and Auto are separate
Start 12 months back and work forward

24. Credit Score Components Summary of the five factors
Payment History
Debt Ratio
Average Age of File
Mix of Credit
Inquiries

25. FICO 08

26. Fico 08 (12 to 16 scorecards)
Collections and Public Records under $100 at onset not scored if original reported amount is less than $100
Does not apply to in-house trade lines in the collection department
Batter segmentation of scoring variables
AU changed dramatically

27. Under Dispute
Partially scored in the first round when under dispute. ( Debt & Negative ) -- Is scored in 2nd dispute.
Fannie does not accept files where accounts are listed as “customer disputes, reinvestigation in process”
Different than “consumer disputes this information”, reinvestigation in process is the key

28. Thank You