How Much Will You Pay For a Low Beacon or Fico Score?
Do You Have Credit Cards?
If you have a low Fico or Beacon score you will be in the Jilted category, getting a good rate on a credit card is simply out of the question. If you do get a credit card, you may be hit with high interest rates, upfront set-up fees, reoccurring monthly fees and cash deposits.
Auto Loans
Your payments on an automobile will go through the roof with bad credit. Here are examples.
$20,000 auto loan over 5 years
| Category | Interest Rate | Payment | Total Cost After 5 Years |
| Prime | 7% | $405 | $24,300 |
| Subprime | 14% | $477 | $28,620 |
| Hardy Money (Jilted) | 21% | $557 | $33,420 |
Home Loans
$100,000 loan for the home over 30 years
| Category | Interest Rate | Payment | Total Cost After 30 Years |
| Prime | 6.50% | $632 | $228,625 |
| Alternative A | 7.50% | $699 | $251,715 |
| Subprime | 10% | $877 | $315,925 |
| Hard Money (Jilted) | 14% | $1,184 | $426,553 |
Having bad credit can cost you thousands of dollars.
Do you need to raise your credit score?
What Factors Affect Your Credit FICO Score?
There are five things used in calculating your total FICO score.
History of payments is 35% of your score
Payment history is determined by if you pay your accounts on time.
Payment history includes any loan that you have had to make monthly payments on. For example, auto loans, home loans, credit cards, retail stores and other lenders.
If you are late on an account it can eventually turn into a public account or collection account. These include, but are not limited to collections, liens, judgments, lawsuits,bankruptcies and wage attachments. These are very serious accounts and hurt your credit score dramatically.
Security- How late is the payment? Have you been 30, 60, 90 or 120 days late? Is it still outstanding? Paying on time will increase your Beacon or Fico Score greatly.
Recent history- How long ago where you delinquent? Are you still delinquent? Recent late payments can hurt your score by 100 points.
Prevalence- How many obligations do you have? What percentages of your accounts are late now?
How Much Debt You Have is 30% of Your Score
Can you make your payments and pay your home bills on time and still have money to spend on every day activities?
What type of account is it? Credit accounts are figured differently depending on the type. Credit cards are different than mortgages in factoring your FICO score or determining if you apply for a loan.
It is important to look at how much you owe total. A lot of accounts with small balances may lower credit score because you could run up those balances at anytime. If you have not used a credit card in longtime, you should use it to make a small purchase. That way the credit card company won’t close the account. Paying down your debt below thirty percent will help keep your credit FICO score high. Try to keep the amount of credit cards you keep down to a minimum. Three or four open credit cards are a good amount to have.
If you have high balances on your credit cards and are close to your limit, it is affecting your score, even if you have made your payments on time. Lenders do not want to see high balances because it shows that you may not have the money to pay anymore than the minimum payment.
Amount of Time Credit Has Been In Use is 15% of your score
The longer you have credit history, the higher the score as long as the credit you have has been in great standings. This means that older people that have always had good credit will probably have higher FICO scores than someone who is younger with good credit, but young people can still have a great credit score.
It is very important to look at how long have you had an account and the length of time it has been in the credit report. The average age of your accounts are taken into factored when calculating your score. You must also use the accounts that you have. If it has been long time since you have used an account, it is possbile that it may be to old to score. Using the accounts you have will help your score.
Inquires, they account for 10% of your credit score
It is easy to obtain credit these days through the internet, via mail, and many other ways. Every time you let someone run your credit and you get an inquiry, and it can hurt your credit score. Mortgage and auto loans are treated differently for example auto loans made within 14 days are counted as one There are no good inquiries. Every time you fill out a credit application, you get one or more inquiries. Too many inquiries look bad. Even though there are no good inquiries, there are neutral ones that don’t hurt your score.Pre-approval inquiries are when a potential lender has looked at your credit to determine whether they want to offer you a credit. These are not factored in to your score, but once you fill out an application with the lender, it will show up to be a bad inquiry that does hurt your score.
Periodic Review inquiries are when lenders periodically review your credit to see if there are any major changes. If they see a major change in your score they may close your account. These are also not supposed to be factored into your FICO score. Inquiries can show a banker how often you are trying to open up new accounts and how recent those attempts were.
Primary consideration is given to the following:
- Number of inquiries in last six months
- Number of accounts opened in the last year
- Number of months since most recent inquiry
How inquiries are calculated is somewhat complex and they should be avoided if possible.
Types of Credit Experience is 10% of your score
It’s awesome to have a different kinds of accounts. Having payment accounts, retail accounts, credit cards and a home loan is good. Since this is only worth ten percent of your score, it is not a big factor but can help. Do not go out a try to open different kinds of accounts because a bad mix may hurt you and lower your score.
Do you have questions about raising your Credit Score?