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Credit scores are literally math and algorithms


Credit Cheat Sheet

Wealth and credit worthiness. Credit scoring cheat sheet, why different credit requests. Credit Scores vary due to being weighted/ Calculated differently due to credit request type and credit bureau, which is why medical collections are ok for some mortgage loan types. Why credit scoring websites are never accurate, and why we call them FACO scores. The fastest way to boost your score by 50 plus points in 3 months. Easier to fix your credit quickly and not pay companies hefty Fees when it's easy to do it yourself. Why is it easier to get a mortgage than an auto loan, credit lines, and credit cards? These are secret cheats to dominate your credit score and not let it overpower you. Secured credit cards are a quick fix and more.

Don't worry about old debt; it can do more harm to pay it off

One of the biggest misconceptions about credit scores is that senior debt should always be paid off, even if it's negative. However, paying off old debt can sometimes do more harm than good.

When you pay off old debt, it resets the clock on the account, making it look more recent than it was. This means that the negative impact on your credit score will last longer. Additionally, if the debt has already fallen off your credit report due to the statute of limitations, paying it off can revive it and put it back on your report.

Of course, this doesn't mean you should ignore old debt forever. Suppose the debt is still within the statute of limitations and is still showing up on your credit report. In that case, you should negotiate a settlement with the creditor or collection agency. Just be aware of the potential consequences before paying off old debt.

Remember, credit scores are complex and vary based on many factors.

How is a credit score calculated for all loan request types, and why

Credit scores are a vital part of our financial lives. They can determine whether we can obtain loans, rent apartments, and get jobs. However, different types of loans can affect our credit scores differently. For example, a mortgage loan may impact your credit score differently than a car loan.

The credit bureaus, such as Equifax, Experian, and TransUnion, calculate your credit score using various factors. The most crucial elements that determine your score are payment history, credit utilization, credit history length, and the types of credit accounts you have.

Additionally, different credit requests can affect your credit score in varying ways. For example, a credit card application may have a minimal impact, while a car loan or mortgage request can lower your score. This is because applying for many loans within a short period indicates that you may need help managing your finances.

Credit scores also vary because each bureau calculates scores differently. While some lenders may check all three bureaus, others may only check one or two. This can lead to differences in credit scores from one bureau to another.

Understanding how credit scores work can help you make smarter financial decisions. Keeping a healthy credit history with on-time payments and low credit utilization is vital in boosting your credit score. Don't let old debts stress you out, and instead, focus on your current costs and financial decisions.

Why mortgage loans are the easiest loan to get

You can typically get approved via FHA with a credit score as low as 580. To get a conventional conforming loan, you generally need a credit score of 620 or higher. What's the minimum income to get approved for a mortgage? There needs to be a minimum income to get approved for a home loan.

The hardest loan to get Unsecured loans are harder to obtain, and interest rates can be higher, as lenders rely heavily on your credit and other financial information to determine your loan eligibility. The better your credit score, the better the interest rate you're likely to get. This is because lenders see a higher credit score as an indicator of lower risk. However, it's important to note that your credit score isn't the only factor lenders consider when approving a mortgage loan. They will also examine your income, debt-to-income ratio, and other financial factors.

Another reason mortgage loans are easier to get is because of the type of debt included in the credit score calculation. Medical collections, for example, are often excluded from the calculation for certain types of mortgage loans. This is because medical debt is seen as less of a reflection of a borrower's financial responsibility and more of a result of unexpected circumstances.

Overall, if you're looking to improve your credit score to get approved for a mortgage loan, there are several strategies you can use. One of the fastest ways to boost your score is by opening a secured credit card and using it responsibly. Additionally, it's important to understand the credit bureaus and how they calculate your score so you can beat the algorithm.

Remember, your credit score is just a number determined by math and algorithms. While credit scoring websites may not be entirely accurate, they can still help monitor your credit score and identify areas where you can improve. By staying on top of your credit score and using these strategies to improve it, you can get approved for a mortgage loan better.

Improve your credit score quickly and easily.

It takes less than a couple of days to pull all your credit reports from the three major credit bureaus, and assessing your credit score is the first step to raising it.

In just a few hours, you can set due-date alerts for bills so you know when a bill is coming up. Paying your bills on time Is one of the most important steps in improving your credit score.

Pay down your credit card balances to keep your overall credit use low. You can also phone your credit card company and ask for a credit increase, which shouldn't take more than an hour.

Don't close old credit card accounts or apply for too many new ones.

You can sign up for credit monitoring services quickly, and they will help you keep on top of your credit score.

Quick credit trick with secured cards

Secured credit cards help build credit if you keep them in good standing by paying the monthly bill on time because all major secured cards report to 1-3 major credit bureaus each month.

The key to building credit with a secured credit card is to use a small percentage of your credit line each month and then pay it off when your statement arrives. This demonstrates to your card issuer and the credit bureaus that you can responsibly manage credit.

Hack alert -You make one payment 15 days before your statement is due and another three days before. Doing this can lower your overall credit utilization ratio, raising your credit score. Keeping a good credit score is important if you want to apply for new credit cards.

Learn the credit bureaus and how each calculates what to beat the algorithm.

Your credit score isn't an arbitrary number, and it is calculated using an algorithm—a mathematical formula created by credit bureaus and other organizations. Credit score algorithms consider multiple aspects of your history, such as your total amount of debt, any derogatory items on your report, and the types of credit accounts you have—present and past.

The most common credit scoring factors on your credit report are:

Your payment history: Your credit score will reflect the on-time payments you make and late or missed payments. Payment history is the most highly weighted factor in calculating your credit score. Credit utilization ratio (capacity): This compares the total amount of credit you're currently using with the total amount of credit you have available. For the best credit score, you want to keep your balances less than 30% for each account. For example, if you have a credit card with a $10,000 limit, be sure to keep the balance for that card below $3,000.Total debt: This is the sum of your debts, including loans, collections, credit cards, and other credit accounts.Credit mix: This looks at the different types of credit accounts you use (like a mortgage, an auto loan, a credit card, store credit, etc.).Account age/depth of credit: Lenders want to see an established history with on-time payments — and how old your credit accounts are is important.Hard inquiries: When someone runs a credit check on you, this is known as a hard inquiry. Multiple inquiries in a short period can affect your score negatively. Public records: This can include tax liens, bankruptcies, or civil judgments.

Are all credit score algorithms the same?

Credit scores don't always seem straightforward, and, to further complicate matters, you might be surprised to learn that not all credit scores are the same.

FICO vs. VantageScore

FICO and VantageScore are two popular credit scoring methods. They each use different algorithms to calculate credit scores.

FICO Scores

A FICO score is a credit score first introduced in 1989 by the Fair Isaac Corporation, known as FICO. Today, 90% of top US lenders use FICO. The model is based on Equifax, Experian, and TransUnion credit scores. Your FICO score is determined by evaluating five sections of your credit report, which are weighted as follows:

Payment history: 35%Outstanding debts: 30%Length of your credit history: 15%Types of credit you’ve used: 10%Amount of new credit: 10%

All FICO scores use this general breakdown. However, the importance of each category can vary from person to person. For instance, if you haven't been using credit for long, your factors may be weighed differently than someone who has been using credit cards and paying off loans for decades.

Additionally, the company periodically updates its algorithm that incorporates new features, leverages new technologies in risk prediction, and reflects current consumer credit behaviors. They number these updates to keep track, which is why you'll see scores like FICO Score 9, 8, etc.

Different loans and types of credit demand a different FICO algorithm. For instance, some mortgage lenders use the FICO Score 3 to determine your qualification.


The VantageScore credit scoring model was first introduced in 2006. VantageScore was developed as a joint effort by Equifax, Experian, and TransUnion to create more predictive and consistent credit scoring. This score is used widely by credit card companies and some lenders.

Your VantageScore is determined by evaluating your credit report, weighted as follows:

Payment history: 40%Depth of credit: 21%Credit utilization: 20%Balances: 11%Recent credit: 5%Available credit: 3%

Like FICO, VantageScore periodically updates its algorithm. The breakdown above calculates your VantageScore 3.0, the most widely-used version of the Vantage Score. It's important to note that your credit score can vary depending on which bureau's credit report is used to calculate it. Not all lenders report to all three bureaus, and the bureaus may have slightly different information on your credit history. This is why it's a good idea to check your credit report from all three bureaus and correct any errors.

Understanding the differences between credit score algorithms can help you tailor your actions to improve your credit score. For instance, if you're working on improving your credit utilization, which is weighted more heavily on the VantageScore, it might be more effective to focus on paying off credit card debt rather than installment loans, which are weighted more heavily on the FICO score. Knowing which score the lender will be using for your loan application can also help you target your efforts toward the specific algorithm.

Credit scores are literally math and algorithms.

Believe it or not, there's even more to your credit score than all of this!

In addition to the two credit scores we've already discussed, you also have a distinct credit score with each credit reporting agency: Equifax, Experian, and TransUnion. Your credit score with each of these agencies is likely very similar; however, it is possible there may be some discrepancies.

Each uses the same FICO algorithm, and Experian simply calls it "FICO or FICO 2," Equifax uses "Beacon," and TransUnion's model is named "Empirica."

Additionally, lenders use specialized credit scores for specific types of loans. For example, if you're applying for a car loan, a lender will look at your Auto Enhanced score—this type of score gives more weight to how you've paid previous auto loans. In other words, if you paid your mortgage and credit card payments in full and on time, yet your car loan payment was always late, that would be reflected in your Auto Enhanced score.

Additionally, lenders use specialized credit scores for specific types of loans. For example, if you're applying for a car loan, a lender will look at your Auto Enhanced score—this type of score gives more weight to how you've paid previous auto loans. In other words, if you paid your mortgage and credit card payments in full and on time, yet your car loan payment was always late, that would be reflected in your Auto Enhanced score.

Keep Track of the Right Scores

All this information probably seems overwhelming. So, we have two pieces of advice for you:

Keep track of your credit score. Regardless of whether you use a free service like Credit Karma or pay for a subscription-like MyFICO, regularly checking your credit report can help you discover mistakes or fraud. We recommend checking your credit report at least twice a month. This way, you can take action if you notice something out of place. Since clearing up discrepancies on your credit report can take months in some cases, you'll want to deal with any issues as soon as possible.

Looking to qualify for a specific financial product? Find out which credit score your lender uses and then focus on improving the elements that specific algorithm uses. By keeping track of your credit score and focusing on improving specific elements, you can increase your chances of being approved for the financial product you need. However, it's important to remember that credit scores are not always accurate and can be impacted by a variety of factors. For example, medical collections may not impact your credit score as much as other types of debt.

Regarding mortgage loans, lenders may be more lenient about medical collections. In fact, some mortgage loan types may not even consider medical debt when determining your eligibility for a loan. This is because medical debt is often unexpected and can be difficult to predict or plan for.

If you're looking to improve your credit score quickly, one option is to get a secured credit card. This type of credit card requires a deposit upfront but can help you build credit by making on-time payments and keeping your balance low.

Ultimately, understanding the nuances of credit scoring and how different types of loans are evaluated can help you make more informed financial decisions. By keeping track of your credit score and taking steps to improve it, you can increase your chances of being approved for the financial products you need.

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