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  Credit Basics 101
What exactly is a Credit Score?A credit score is a number lenders use to help them decide: "If I give this person a loan or credit card, how likely is it I will get paid back on time?" Credit scores are also called risk scores because they help lenders predict the risk that you will not be able to repay the debt as agreed. Scores are generated by statistical models using elements from your credit report, however scores are not stored as part of your credit history. Rather, scores are generated at the time a lender requests your credit report and then included with the report. Credit scores are fluid numbers that change as the elements in your credit report change. For example, payment updates or a new account could cause scores to fluctuate. There are many different credit scores used in the financial service industry. Scores may be different from lender to lender (or from car loan to mortgage loan) depending on the type of credit scoring model that was used. WHAT’S A GOOD SCORE?In general, you are likely to be considered a better credit risk if your FICO score is high. Under mortgage lending guidelines, for example, a score of 650 or above indicates at this point of time reasonable good credit history. People with these scores will usually find obtaining credit quick and easy, and will have a good chance to get it on favorable terms.Credit Score and Interest rates are inversely proportional…EX: A low credit score gets a very high Interest Rate… A high credit score gets a very low Interest Rate.Scores between 620 and 650 indicate basically good credit, but also suggest to lenders that they should look at the potential borrower to assess any particular credit risks before extending a large loan or high credit limit. People with scores in this range have a good chance at obtaining credit at a decent rate, but may have to provide additional documentation and explanations to the lender before a large loan is approved. This means that their loan closing may take longer, making their experience more like that of borrowers in the days before credit scoring, when every individual was researched.A score below 600 may prevent a borrower from getting the best interest rates or even approved at all in this current market depending on numerous factors. As they may be considered a greater credit risk-but it does not mean that they can’t get credit. The process will probably be lengthier and, as noted, the terms may be less appealing, but often credit can still be obtained.
What are the components of your Credit Score 1. 35% → Payment History Paying bills on time and in full has a positive impact, late payments, and derogatory information have a negative impact. Your score is negatively affected if you have paid bills late, had an account sent to collections, or declared bankruptcy. The more recent the problem, the lower your score—a 30 day late payment today hurts more than a bankruptcy five years age. 2. 30% → Outstanding Credit Balance Money that you owe approximately accounts for 30 percent of your credit score. Debt ratio of outstanding balance to available credit is important. Keep your balances below 30% of the available credit limit. Pay outstanding debt down as close to zero as possible. It may be worth calling and asking the credit company to increase your available credit to lower the debt ratio, provided they can do so without a hard credit inquiry. So remember this portion of your score pays particular attention to the amount you owe in “revolving credit”. For example, if you have several credit cards with a small balance that you pay off regularly, then this reflects better on your score than if you had the same number credit cards with no balance, because the latter shows a greater likelihood of “maxing out” those cards. In the same situation if you have too many credit cards it will reflect poorly on your credit report. 3. 15% → Credit History A seasoned borrower is a strong borrower. Closing old accounts and opening new ones will decrease the average length; therefore the longer your accounts have been open, the better. It is never a good idea to close an account. Do not close old accounts even if they have a high interest rate. 4. 10% → Type of Credit A Mixture of auto loans, credit cards, and mortgages is positive, rather than a concentration in credit cards only. Credit card debt by itself is all unsecured debt. 5. 10% → Inquiries Hard inquires for credit will negatively impact the score. Soft inquires do not impact your score. Auto and mortgage inquires receive special treatment and will not affect your scores for 60 days. Each inquiry can cost two to twenty points on a credit score.
Credit Information Provided by CMA Financial  PrimeLending - 120 East Reynolds Rd Suite 4; Lexington, KY 40517 - 109 Quinn Drive, Nicholasville, KY Office Phone: (859) 361-5626 Fax: (866) 861-0972 Toll Free Phone: (800) 949-8762 :: Our Staff :: Testimonials :: Tell-A-Friend :: Apply Now :: Rural Housing :: FHA :: Kentucky Housing :: VA :: MCC -$2000 A Year for 30yrs :: $5000 Move Up Home Credit :: Pre-Qualify :: Credit 101 :: Today's Rates :: Rate Lock Options :: Refinance :: Past Bankruptcy :: Monthly Payment Calculator :: Debt Consolidation Calculator :: Rent Vs. Buy Calculator :: Central Ky :: Lexington - Area :: Privacy Policy :: Home Ownership Process :: Marketplace :: Danville - Stanford News Paper :: Rates and Loan Programs are contingent on credit and other underwriting criteria.Thank You, for Visiting our Website and Choosing our Company Robert Vanleer, Senior Loan Officer Please note that the information above is not intended to be any decision of, or commitment to, any loan type or amount of loan for which one may qualify with any financial institution. The information is not intended to extend any legal, tax or financial advice. The accuracy of the information contained in this advertisement is not guaranteed. Please consult a loan professional to learn more about your eligibility for and availability of a particular loan product.” In accordance with Section 326 of the USA PATRIOT Act of 2000, PrimeLending is required to obtain a copy of the documents used in identifying our new account customers. This notice is being provided to your for adequate notice given under this act.'\ 
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