There are 5 main factors that determine your FICO score

There are 5 main factors that determine your FICO score:

Payment history. If your credit score was a pie, the biggest piece would belong to payment history. It accounts for 35% of your score. That means making on-time or late payments on all your credit accounts can really make or break you.

Debt balance. The next piece is how much debt you owe -- it makes up 30% of your score. Credit companies really like people who use less than 30% of their available debt limit. That means if you’ve got three credit cards with a total credit line of $10,000, you don’t want to ever carry a balance of more than $3,000 at once.

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Length of credit history. 15% of your score is determined by how old your credit history is -- in general the older your accounts are, the better it is for your score.  But  even people who haven't been using credit long can have high scores, depending on how good the rest of their credit report is, according to FICO.

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New credit applications. Applying for new credit takes up 10% of the pie. If you apply for new credit every other month, that sends a red flag to credit bureaus.

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Types of credit. As for the types of credit you have, this constitutes another 10% of your score. It’s better to have low levels of revolving debt like credit cards and more kinds of non-revolving debt like a car loan or student debt. It just makes you look less risky.

Ty Laffoon

Yellen is going to raise rates.......

From USATODAY

Federal Reserve Chair Janet Yellen said Friday the central bank will raise interest rates only gradually because of persistent slack in the labor market, the risks of another economic downturn and vestiges of the Great Recession.

She said that although the Fed doesn't need inflation to pick up before raising its benchmark rate, a further significant weakening of inflation or wage growth would make her "uncomfortable" with a rate hike.


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"I generally anticipate that a rather gradual rise in the federal funds rate will be appropriate over the next few years," Yellen said in a speech at the San Francisco Fed.

The Fed's key rate has hovered near zero since the financial crisis of 2008 despite unemployment reaching a near-normal 5.5%, down from 10% in 2009.

Last week, the Fed dropped an assurance to be patient as it considers an initial rate hike, but it suggested it's in no hurry to act. Its projections show the first hike is likely in September, and rates will rise about a percentage point each year, about half the pace of previous rate-hike cycles.

Yellen said traditional economic rules that say interest rates should be higher don't apply because "appreciable slack still remains in the labor market." For example, the ranks of part-time workers who prefer full-time jobs remains high, and many discouraged workers aren't even looking for work.

Yellen cited studies that show the economy may grow more slowly in coming years because of more limited productivity gains from technological advances.

Another reason to boost rates gradually, she said, is that if growth were to falter, the Fed would be hard-pressed to respond because its benchmark rate is near zero. Also, she said, the Fed might be reluctant to resume bond purchases to hold down long-term rates because its balance sheet is already bloated.

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She said the effects of the recession have been so severe they've held back business investment, limited firm formation and prompted workers to leave the labor force.

"Some of these effects might be reversed in a tight labor market, yielding long-term benefits associated with a more productive economy," Yellen said.

As a result, she said, the Fed could allow the unemployment rate to decline "for a time somewhat below estimates of its long-run sustainable level."

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Yellen said the Fed won't wait until wage growth or inflation pick up before raising rates. The decline of unions and technological changes probably have slowed wage growth long-term, she said.

She added, "I would be uncomfortable raising the federal funds rate if readings on wage growth, core consumer prices and other indicators of underlying inflation pressures were to weaken."

Yellen echoed remarks this week by Fed Vice Chairman Stanley Fischer that rate increases won't follow a predictable course, as they often did in the past.

"Rather, the actual path of the policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause or even reverse course, depending on actual and expected developments in real activity and inflation," she said


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Ty Laffoon

Get your FICO higher by paying more than the minimum

TransUnion, one of the three major credit reporting agencies, has made several changes in the last few years to the credit reports it provides consumers, in addition to developing a new credit score to help lenders better evaluate potential borrowers.

If you've requested your TransUnion credit report recently (you get free credit reports every year through AnnualCreditReport.com), you may have noticed there are a lot of details in it about how you manage your account. The new report format — part of their new CreditVision suite of tools — includes up to 30 months of account history and 82 months of payment performance data. The CreditVision New Account Risk Score uses all that data to generate scores ranging from 300 to 850. About 26.5 million consumers who are not scoreable using what TransUnion calls "traditional scoring models" have CreditVision scores, and 3 million of them fall into the prime or super prime categories, aka good or excellent credit.

These figures come from an internal analysis of TransUnion consumer credit files, in which the same reports were used to generate a CreditVision New Account Risk Score and a VantageScore 1.0. More than 23 million U.S. consumers would have super prime credit scores under the new model, because the score takes a more detailed look at the data, the credit bureau claims.

What's New?
Charlie Wise, vice president in TransUnion's Innovative Solutions Group, explained it as a difference between what he called static credit report data and dynamic credit report data. Here's what that difference means:
When a potential lender (or you) requests your credit report or credit score, the result is a snapshot of your accounts as your creditors most recently reported them to credit bureaus, potentially including credit card balances, loan status, whether or not you've made payments on time, collection accounts and any number of other things that are reported to credit bureaus.

By comparison, there are more details in the CreditVision history. CreditVision data includes more than if you paid your credit card bill on time, it includes how much you paid; rather than just seeing your current balances, a potential lender can see whether the balances are growing or if you're paying them down. They can see if you make minimum payments, pay the full statement balance or pay something in between. These data points — if your lender furnishes them to TransUnion, which it may not as this is a pretty new feature — show trends that may be more helpful in a lender's decision-making process than merely looking at your account balances at a single moment in time.

That's the idea, anyway — that more specific data can help lenders understand you better as a potential borrower by looking at your spending and payment patterns. Generally, you want to use less than 30% of your available credit. Traditional scoring models don't specifically factor in whether you pay the balance in full or not, rather, they focus on what percentage of your available credit you're using and if you're paying on time. With the CreditVision score, showing your ability to regularly pay a large balance may lessen the impact of using a high percentage of your available credit. That could have a serious impact on the credit score of someone who spends within their means but has low-limit credit cards.