Kiwanian Jason Tarver spoke to the Kiwanis club, Tuesday, August 22nd. Dr. Bill Gaddis introduced Tarver, known in the Kiwanis club for being in charge of the Christmas Parade every year. Tarver is the Regional Lender for Sabine State Bank. He gave an interesting talk on FICO Scores and gave several handouts so we would have more information. There are 3 credit reporting bureaus-Experian, TransUnion and Equifax. For an in house loan a bank would use Experian. For home mortgages a bank would use all three. FICO scores or your credit score is based on your payment history, amount owed on everything, your available credit balance and your length of credit history. FICO scores do not take into account that people do life and things happen. If you close out a credit card or do not have a credit card it lowers your credit score. Closing out an existing credit card reduces your available credit limit. There are people who have not received a loan because they did not have a credit card. Another example would be if you were shopping for an automobile and they ran your credit every place you went it would lower your credit score.
The credit scores that Tarver normally sees is between 550 and 750. In the 1980s and 1990s the auto industry used FICO scores as a guide but now they are used extensively. Consumer loans use FICO scores but it is not as big a factor yet in commercial loans, but is coming. Automobile insurers use FICO scores to determine insurance rates.
High school juniors and seniors need to learn about FICO scores. College kids over 18 should get a credit card with a $500-$1000 limit and pay it off 30 days. This will start their credit score off correctly. Some parents sign for a card for a child that is not yet 18 so they can begin building a credit score. Paying a credit card on time is very important because once you are behind it takes a long time to get your credit score back up.
The reason for credit scores was anti-discrimination. FICO scores have benefits as well as drawbacks. Government-backed home loans are looking at adding gender, ethnicity, and race to credit score.
A lot of people especially younger people don’t know about keeping up with a bank account and how to balance it. Older people may not have a credit card because they have always paid cash. A lot of factors go into your credit score and your ability to borrow money at a good interest rate.
This was a very interesting and informative program and gave information that some may not have known.
