A credit score is a combination of many differnent categories that are affected by what you owe money on, when you paid it back, how long have you had the line open, and much more.
Americans are ranked along this score board, in order to figure out how we compare to each other. The positive aspects are:
- Loans are quicker with lower interest rates
- Credit decisions are fairer and not based off the list below
- Over time you are forgiven
The following information is not considered by the FICO scoring formula:
Your race, color, religion, national origin, sex, or marital status
- Your age
- Your salary, occupation, title, employer, date employed, or employment history
- Where you live
- Any interest rate being charged on a particular credit card or other account
- Certain types of inquiries (such as promotional, account review, insurance or employment-related inquiries)
- Credit counseling
- Any information not found in your credit report
- Any information that is not proven to be predictive of future credit performance
With the current market, as a Realtor, I am asked how long will bad information stay on credit. Here are the standard timeline, but the ability to purchase a home depends on the circumstance for each of these actions:
- Late payments: 7 years
- Bankruptcies: 7 years for completed Chapter 13 bankruptcies and 10 years for Chapter 7 bankruptcies.
- Foreclosures: 7 years
- Collections: Generally, about 7 years, depending on the age of the debt being collected.
- Public Record: Generally 7 years, although unpaid tax liens can remain indefinitely.
- Someone close to you: friend or neighbor
- Service employee like waiter or cashier
- Online criminal
- Employee at a bank
- Someone at work
- Everyone else