Fair Isaac Corporation (FICO) Earnings Call Transcript & Summary

Hello, everyone, and welcome to today's FICO Webinar: Score a Better Future National Homeownership Month. Today's session is being recorded. [Operator Instructions] We will also be taking your feedback on the [indiscernible] polling questions today. During that time, the polling window will pop up in the center of your screen. Just click on the circle or square that corresponds to your answer and then click on submit. [Operator Instructions] All right. Once again, at this time, let's begin today's FICO webinar: Score a Better Future National Homeownership Month. It is my pleasure to introduce your host, Keon Haley, Program Director for Score a Better Future. Keon, you have the floor.

Thanks, Jessica. And good day, and thanks for joining us for our Score a Better Future Credit Education webinar. As Jessica said, I'm Keon Haley, I am the Program Director for Score a Better Future, and I'll be your host for tonight's webinar. We are hosting this webinar in honor of National Homeownership. And so for many, a home is more than just a resident. It's a place that instills a sense of pride, security and comfort that no matter what challenges in life arise, we have somewhere to go and call our own. This is the power of homeownership. It is also a major source of generational wealth for many consumers, and it's the central part of the American dream. We are here today to do our part to help you obtain that dream by providing you with information you need to know about credit, credit scoring and how it plays a role in the home buying process. During today's webinar, you will hear from FICO Score expert, Tom Quinn, who will be sharing important information about credit reports, your FICO scores and where you can obtain those items and why they're so important to monitor, especially when you're searching for a home. You will also have the opportunity to meet with financial well-being coaches from operation home who can help you start down the path of homeownership and start a plan to get you on your way to crushing your financial goals. So you will hear more about those opportunities later in the session when Operation HOPE representative, Yolanda Butler, provides some additional information about Operation HOPE and the programs they offer. If you have any questions while we're going through the presentation, as Jessica mentioned, please ask them in the Q&A. We have Operation HOPE coaches standing by to answer your questions there. And we'll also take some of those less personal questions and have those answered live later in the session. I would like to also thank our wonderful partners who have helped us promote and put this webinar together. All of your hard work is really appreciate, and we greatly appreciate your partnership. And so without further ado, here's the man of the hour, Vice President of Scores, Tom Quinn.

Thanks for the introduction, Keon, and welcome, everybody, to today's session. We're really excited to be here, and we'd like to kick it off with just a quick polling exercise to get a foundation of what everyone knows about Scores already. So if you can take a few moments, the screens popped up, you should be able to answer the questions. As a side note, no need to take notes or whatnot. We'll be able to get you a copy of the PowerPoint after the session is over. So you can just focus on listening and seeing and learning. So the questions here are true or false. So the first one is missing a few payments now and then is okay and won't have much of an impact on your score. Is that true or false? A hard inquiry could lower your FICO score is the second question. Is annual household income a part of the calculation of a FICO Score, is closing on used credit card accounts a good idea as a means to increase your score? And then lastly, the reporting of a credit account in forbearance or deferred payment plan is considered negative by a score. So these are some of the common questions we get from consumers. And so we've packaged them up and would love to see what the audience here knows. So let's go and thank you, Jessica, for popping that up. So about 30% of you felt that missing a few payments now and then is okay and won't hurt your score. Actually, the opposite is true that missing a single payment is enough to have a substantial impact on score. So paying your bills on time is the #1 action you can undertake to manage your FICO scores and get them increased over time. Hard inquiry could lower your score. Everyone got that one right. So within inquiries, there are 2 types. There are hard inquiries. So this is when you would go to a car dealership today, for example, and apply it for financing for the car. They're going to pull your credit report on you, and that's considered a hard inquiry. If you did approve of credit offer in the mail, they may have used your score to preapprove you for that. That won't count. But if you respond to the credit card offer and they pull a credit report on you, that is considered a hard inquiry. So hard inquiry is basically anytime you're seeking credit proactively. And the opposite of that is a soft inquiry. And a soft inquiry would be, for example, when you pull your own credit report to see your score and credit report, that's considered soft [indiscernible] against you. The third question, annual household income is a part of the calculation score. Most people said that, that was true. And that's actually false. Income is an important data element that lenders will ask for in using their assessment of your application for credit, but it is not considered in a FICO score. And the main reason is, because it's not verified to be accurate. And so it is not used for that reason. The next question was, is it a good idea to close unused credit card accounts? And the answer on that is no. Closing unused credit card accounts will not help your FICO score and could actually hurt it. And we'll talk more about that during the presentation. Then the last question was, is the reporting of a credit account and of deferred payment considered negative FICO Score? And the answer is no. The fact that you're in forbearance or a deferred payment plan, the [ flag ] of that is not considered negative. But how your credit has managed after that could have an impact on your score. So we'll talk about that a little bit later. So good job. A lot of you are already credit score knowledgeable, that's excellent. So hopefully, we'll be able to add to that knowledge level for the rest of the session. So I'll close that out. So what are we going to talk about today? The first section is we're going to do a credit score system overview, just to make sure everybody is on the same page how system works and who are the players. Then we'll go over the FICO Score dynamics. I mean the other -- the FICO Score in terms of how they're built, what they're looking for, how you can manage yours better. Then we'll talk a little bit about FICO Score dynamics. And then we will finish it up with a section about protecting your credit, and then we'll have the Operation HOPE folks join us in helping understand the services that they provide. So there's a lot of different players in the credit ecosystem space, and they all have different roles and have different features that you need to be aware of as you're thinking about your credit empowerment situation. So obviously, there's you, me, everybody here, the consumer, lenders want us to apply for credit and loans from them. They also want us to pay on time and avoid things like bankruptcy and collections. And they want us to utilize our available credit with them. That's how they make money. So you as a consumer have access to your credit report and FICO Scores through a number of different channels. So you are in control of your destiny in terms of your credit rating as well as the ability to play in the marketplace to get credit from different lenders. Then we have the lenders. They are in the business to bring credit and loans to you. They pull your report when you apply for credit to understand how you've been managing your credit to date and use that information in risk assessment. They also report your information to the bureau in terms of how you've been paying your bills as agreed or not or if you haven't [ paid ] payments. And they also are a source for you, the consumer, to get access to your FICO Scores for the program called Open Access, and we'll talk about that in a little bit. Then we have the credit bureaus. In the United States, there's 3 main national credit bureaus, Equifax, Experian and TransUnion. And they create and update your credit report profile with information provided by lenders as well as the court system. They house the FICO Score algorithm that calculates your FICO score and appended to the credit report for you to see or a lender to see. And they also make credit reports available to you to make sure that you can ensure that the information being recorded on you is accurate. And the last player but not the least is FICO, and many consumers consider us or confuse us being a credit bureau. So we do not have access to any credit bureau information on you. What we do is we build the FICO Score mathematical formulas that generate the score. And so that software that calculates the score is programmed at the credit bureaus and the -- whenever a lender or someone requests your FICO Score, it's passed through that algorithm at the bureau and it's never -- that information is never provided to FICO. And FICO has lots of information and focus on education in helping consumers understand scores. Obviously, this seminar is one of those. And we have ability to provide consumers with their FICO score through a variety of programs, including myFICO.com as well as Open Access. So this web of entities and flow of data are basically the infrastructure of how it all connects. Time for another polling question. So where have you recently obtained your FICO score? And you can check more in the one than applying your situation. So if you think over the last 3 months or so, where you were able to get access to your score, was it with an online statement or one of your lenders or credit card issuers at creditcard.com, at TransUnion, at myFICO.com, at Experian, or you have not recently obtained your score? So I'll give you a few minutes to think about that and answer the questions. All right. Thanks, Jessica. So a large percent of you or over 50% are able to get -- have indicated you've got your FICO score in your online statement. So does have a program called Open Access, and it basically enables lenders such as credit card issuers, Citibank, Wells Fargo, et cetera, other big institutions as well as small institutions and credit unions, the ability to provide new access to your FICO score they pooled for mostly account management purposes. And with that information, you also get access to your top reasons why the score is not higher. So I'm glad that a lot of you are able to take advantage of that. At Credit Karma, about 20% of you indicated you've got your FICO score from Credit Karma or TransUnion. So these are 2 entities that do provide access to credit scoring solutions on their consumer-facing websites, but they're not FICO scores. They are different brands of scores. A small percentage of you have gotten there at myFICO.com, at Experian about 30%. And Experian is a distributor of FICO scores. So when you go to Experian.com, you are getting access to the FICO Score. And about 25% of you have not recently attained your FICO Score. And so hopefully, that's something that we will remediate today when you have the opportunity to work with the [ counselor ] and get access to your score. Thank you. So in the previous polling question, you saw that some people have indicated they thought they were getting their FICO score. When in reality, it was not a FICO Score, it's a different branded score. So I sometimes get consumer complaint calls sent to me, and I had one several weeks ago where the consumer was frustrated that they had planned on going to -- they have visited a car dealership over the weekend to purchase a car, and they needed financing to get the car, and they had done their homework, and they had went to a site and got access to their credit score that said that they were in the low 700s. So they knew that the low 700s while is a decent score, most lenders would consider that a good score, they were confident when they walked into the finance arm of the dealership that they would have a good experience. However, when the finance dealer actually entered their information and pulled the score from the system that he was using, it ended up being scores in the upper 600s. And so this put them in a higher interest rates tier, and they were frustrated, because they even had credits, their score that they had attained in one of these other sites and the car dealership informed them that he's pulling a FICO score and the score that they pulled on their Credit Karma site was not a FICO Score. So it's important to understand that there are different credit scorings out there, and that can cause confusion. And we want to make sure that when you're looking at the scores, especially if you're thinking about getting financed, you want to get a version of the score that's being used in credit decisioning. And FICO scores are more likely to be used by lenders and another versions of the score. So it's your best interest to try to make sure you find a FICO Score to be tracking to. And so we have logic and rules in place with our distributors that they also reference say there's a FICO Score we're representing into you in this -- on the online environment or in a paper [indiscernible] display. So if it doesn't say FICO, it's most likely not a FICO score. So don't be into that confusion like the gentleman I was talking to a couple of weeks ago. So where can you get your FICO score? There's a variety of different places. So we already talked about the FICO Score Open Access program. We also have FICO scores available at myFICO.com for any consumer that go up and sign up for those products that have that. In Experian.com, so Experian is 1 of the 3 major bureaus, and they offer exclusively FICO scores in their solutions. And so the next logical question I usually get is where kind of get my FICO Score for free, because we all like free stuff. And you can get your score for free at Experian.com as well as myFICO.com. So there's plenty of opportunities for you to see how lenders see you and get access to the score that's being used for credit decision. Again, just make sure you check. If it doesn't say FICO Score, it's most likely not a FICO Score. So that was to give everybody a quick overview of the credit system and how it works and the players involved. Next, we'll be diving into how FICO Scores are built, what they're looking at and how you can manage them over time? So the FICO score is calculated on the information in your credit report. So it makes it important that you understand kind of what is in your credit report and what could be eligible to be influencing your score. So in this example of a sample credit report, we kind of break it into what we call information zones. And the first information zone is your personal identification information. So here, we're looking at -- the information captured here would be your social security number, your date of birth, your street address. Sometimes they have employment information listed and income information listed. Typically, that's not verified information, and it could be out of date or not even relevant. I know on my own credit report, my employment was an employer than I had over 20 years ago. So it's true, I did work there, but it's been a long time. So the information here is used to match and find your credit report file in credit report database, but it's not used in calculation of the score. Then we have public record section. So the credit reporting agencies have links into the public record system of court houses across the country. And if there's a notice of bankruptcy filings in your name, then that would populate on the credit report and be considered in the score. And obviously, bankruptcy is not a good thing, and that's going to hurt your score significantly. They also report third-party collections. So this is typically a scenario where if you were late on a credit card and you don't pay in 30 days, 60 days, 90 days, 120 days, 180 days or 6 months. Typically, the lending institution will sell your account to a collection agency, and the collections agency will try to collect on that money owed. And so that's information that's reported to bureau and it's considered negative by the score. The fourth category of information zone is trade lines or account information. And this is where a lot of the meat of the score is generated from, because there's a lot of information here. So you can see we have listed here a bankcard, which is a fancy name for a credit card. And we would have information about when it was opened, when it was last reported on, what is the credit limit available on that building trade line, the balance, your current status, if it's paid as agreed or not, and if it has any historical delinquency. So we collect that information on revolving trades like credit cards as well as auto loans and mortgages or retail, et cetera. And as I said before, that's what's really driving the score from us individuals was this, the information [indiscernible]. And then the last category is inquiries. We talked about that a little bit in the beginning, but basically, inquiries are reported on your credit report for up to 2 years, and then they fall off the credit report. And FICO Scores look at inquiries that were posted in the last 12 months. So we're not -- if it's greater than 12 months old, it's not being considered by the score. Inquiries generate a lot of questions, and a lot of people focus on them. But in reality, they generate relatively few negative points on your score. So the real focus should be on paying the bills and keeping the balance low and not worrying about the impact of a new card in their credit score. So the credit report has these information zones and all this data in it. So one is a FICO score. And the FICO score is basically a 3-digit number ranging from 300 to 850, where higher is better that lenders use to make better credit decisions on whether they [indiscernible] credit as well as the terms associated with that credit -- the credit line and the APR. So if you think about a lender having to look at 100 applications and the average number of credit trade lines reported on the credit score is 14, looking at the 100 applications manually versus having a score that has a predictive probability of the consumer paying as agreed or not, it makes it much more efficient and fast and accurate to use the scoring than using judgmental review of a credit report in your decision process. And that's why lenders like scores. While the U.S. consumer is a pretty credit-hungry consumer, we rely on credit a lot in terms of funding our lifestyles and buying a car, getting a home with a mortgage, going to University with student loans, and then using credit cards for paying the goods and services. So most U.S. consumers are 18 years-old or have a credit score and a credit report, but not everybody does. And there's a minimum requirement we have some in order to generate a score on a credit file. So first of all, we will not score a file if it has a deceased indicator on the credit report. So that's something that I don't think anyone would find controversy with. And then it requires at least one credit account that have been opened in the last 6 months, but we have been opened for 6 months or greater, and one credit trade line that has been updated or reported on the last 6 months. So you can be a consumer that had opened up a target credit card 7 months ago, and you've used it 3 months ago. So it would be older than 6 months and updated -- your recent update was 3 months, that's enough information on that relatively small bit of information for us to generate a score that our lenders could use in the credit decision process. So as I've indicated, most people have a credit score and credit report, but if you don't, there's ways you can go about getting into the system, and there's a little bit of catch 22 that people feel that in order to get credit, you have to have credit, and there is some trick to that. But if you're a consumer who doesn't have a FICO Score yet and you are 18 years or older, some ideas you could explore would be to see if you could be put on as an authorized user on a credit card account of a family member. And basically, that allows that consumer -- the primary user of the credit card for that account information to report under your name of the credit bureau as well. And so you get the benefit of having a credit established through that authorized user relationship. You could sign up for a secure card with your credit union. And so basically, the way those work at a high level is you sign up for a secured card of $500 by cutting down about $500 as a guarantee against that. And you use that credit card like a normal credit card and it's reported of like a normal credit card, there's no indication that it's secured and you would -- as long as that secured card is at least 6 months old and have been updated in the last 6 months, it would be enough to generate a score. So there are different options available if you happen to being someone who is new to credit or perhaps recently immigrated to the country and don't have a established report yet to get those established and get access to credit and other services by having a [indiscernible] credit card. We have another polling question here, Jessica, and this one is, what information is considered in the FICO score? And check all that replies. So there can be more than one answer. So does a FICO Score consider women status, the data in auto room was open, credit card balances, ZIP code, bounced checks or none of the above. We'll give folks a minute to think through and the answer the question. Our employment status, actually, employment status is not considered in the calculation of the FICO Score. Again, it could be -- you could see your employer listed on the credit report and that's first information zone, but it's not verified. And so the score does not consider that. Again, a lender may ask for that information in the application, and use it in their credit decisioning process, but it's not part of the score. The data in the auto room is obviously included in the score. Everyone got that one right. Credit card balances is same thing. Nothing to surprise there. ZIP code is not considered in the calculation of the score. So whether you live in Beverly Hills or Royal Town in Kentucky, it doesn't matter. The ZIP code is not considered in that score calculation. And bounced checks, this one's a little bit of a trick question -- or answer. So obviously, most of us would agree that having a balance check is a negative sign and indicative of potential risk there, someone recently bounced a check. However, checking account performance is not reported to the 3 big credit reporting agencies. So it's not considered a part of the FICO Score because it's not -- that data is not available. But there are other entities out there that track bounced check behavior, and a bank may use that in addition to FICO Score when they are making credit decisions that they have access to that information. So in summary, the things that are considered: Your trade line or your credit accounts, credit inquiries hard ones, collections, third-party collections and public [indiscernible] and bankruptcies. What's not considered is how old you are, where you live, what type of employment you have, how much money you make, your race, your gender, et cetera. So we're really looking at the raw credit information in your credit report to come up with the score that's predicting and compare those or not in the future successfully. So what makes up the calculation of FICO scores? So we saw the information zones in the credit report. So when we build a FICO Score, we're looking at basically 5 predictive categories of information. The first is payment history, which represents 35% of your score. Your outstanding credit debt represents about 30% of your score. How long you've had credit history represents about 15% of your score. Activities related to pursuit of new credit has about 10% of your score. And credit mix represents another 10% of your score. So you can see in this pie chart, if you had to focus on one thing to improve your score or maintain a good score, what's going to have the greatest contribution with that? And that's payment history, making your payments on time. And then the second one is outstanding debt owed. So managing reasonable amount of debt owed and making payments on time, that reflects about 65% of your score. So those are areas that you want to focus on. So what are we looking at when we're building the score in relation to these predictive characteristics or categories? So it's kind of no different than, let's say, you later this evening get a call from your friend, cousin, brother, relative, et cetera, and they said, "Hey, can I borrow $200 from you?" So if that were to happen to you, what are some questions that are going to come up in your mind regarding that request? So one question maybe, have I lent this kind of money to my brother before, and has he paid me back, or has he never paid them back, has my brother borrowed money from my mother and my other brother, my sister, and did he pay them back on time? So knowing that information and behavior traits, not just with me, but with other members of my family. What's he want to use it for? Is it to pay rent, or is it to go buy an airline ticket? So just general questions you would think about before you would give your money to your relative asking credit, the FICO Score is doing the same thing. It's asking a series of questions about the credit report and getting an answer. And then we mathematically and statistically assign a point value that information to come up with the score. So let's go in a little bit more depth and seeing what we're looking at. So payment history is all about are you making payments as agreed and on time with your [indiscernible]? So when we look at delinquency, we look at it in three main ways: We look at it in terms of how recent it was; how severe it was; and how frequent it was. So recency is really important. If you have missed a payment recently, like in the last 12 months, for example, that's going to have a much harder hit on the score than if you have a blemish or a missed payment that happen, let's say, 5 or 6 years ago, because it's showing recent behavior and the model is going to looking at the recent behavior to come up with -- or the [indiscernible] tomorrow, when you extend this credit to them. The second will be: Severe. So do you have a late payment on your report that was just the 30-day late that happened 2 years ago? Your indication, you forgot to pay a bill or just something happened, and there's just -- it only went one cycle past due. So again, here, if you're more severe, like about 30 days past due, but you're 120 days past due, that's more than just forgot to pay my bill or forgot to pay it because you've shown 4 months consecutively, then you missed payments. So the more severe it is, the harder hit it's going to have on your score. And then the frequency. So is this a onetime random occurrence of a missed payment on your [ cold ] credit history or are we seeing a pattern of miss payments last month, the month before, 5 months ago, 12 months ago, et cetera? So with payment history, again, we're looking at how recent it is, the more recent it is, the more it's going to hurt. How severe it is, the more severe it is, the harder it's going to hit. And how many do you have, is there a lot there? And I've seen credit reports where you look at them side by side. And they're similar, not the same, but they're similar. And the person who had a, let's say, more severe delinquent. 90 days has a better score than someone who already has a 30 day. But that 30-day was posted last month, whereas the third 90 day was posted 5 months ago. So it's not all [indiscernible] or repayment history. The good news is the scores are flexible and forgiven. So as this delinquency information reaches on your credit report, it has less and less of an impact on your scores if your new behaviors are showing good payment as agreed. So delinquency information is required by law of the [indiscernible] of credit report after 7 years. So if you had a bankruptcy that occurred in 2009, it would not be considered in the score today, because it would not be in the report of [indiscernible] that happened. And the other option -- the other information here is that as it ages, it has less impact on the score. So it's not all doom and gloom if you have recurrent score that's not as high as you want when it's the -- the credit delinquencies. Again, as they age, they have less impact on your score. So the second consideration is what we call outstanding debt or amount zone. So this is looking at your credit amounts out of the reported to the bureau. So what are the balances reported on your credit cards? What are the balances owed on your installment loans, like a student loan or personal level or a mortgage or a car loan. And so we're looking not only at your news of those in terms of balances, but more importantly, how much of your creditor is being used, it's called utilization percentage. So how do we calculate that? So let's say you have two credit cards, and each credit card has a $5,000 line available to use. So that means you have $10,000 available credit to you. And then on each card, you have $2,500 balance. So then we take the $2,500 balance divided by $5,000 line to get a utilization calculation of 50%. So you're using 50% of that $5,000 line. What the model tells us and the data tells us is the more of your available credit that you're using, sort of your utilization percent is 70%, 80%, 90%, over 100%, the risk you are and the more points you are going to lose. So I have much experience in from irate consumers saying, "I don't understand how the score can be so low. I have no miss payments. I pay my bills as agreed." And usually the next question I ask him is well, let's talk about how much debt you have. And so it turns out in 9 times out of 10 that they have made all their payments as agreed. So they're getting positive points for that, but they sometimes have $100,000 in credit card debt. And so that is having a substantial impact on their score. So in this one, what's important to understand is, again, it's somewhat controllable in your hands if you have reserves of extra money where you're able to pay down some of that additional credit card debt that will help. In terms of strategies, typically, the score weighs more heavily revolving debt, so like credit card debt, department store debt versus installment debt. So if you, let's say, get to your tax return and you've got a return of $750 and you want to reduce your credit balances, you're probably going to get a bigger bang for your buck on the score by applying that incremental money to pay out on revolving trade line versus installment trade lines, like car loans and personal loans, et cetera. And then with credit cards, if you have multiple credit card balances, one strategy that may be beneficial is to pay down your lowest balance of credit cards first, so that you are showing that you have less accounts and less credit card accounts with balances as opposed to paying off or trying to pay down a large balance where it still would have a balance after you done. But that all depends on your objectives in terms of if you're looking to pay off highest interest rate cards first. So again, the Operation folks can look at your credit report and provide you with all the different options you have and which ones make the most sense. So right now, we've covered the credit history, payment history as well as outstanding debt, and those represent 65% of your scores. So those are areas where you really want to focus when you're looking at your score and trying to figure out ways to improve it over time. The third category is what we call length of credit history. So lenders like to see consumers that have a long credit history on paying as agreed, just stability and low-risk behavior. So things we're looking at here is how long you had your [ Otis ] accounts. So let's say, you opened [indiscernible] card 30 years ago. So it's providing good information about how long you've had credit history in terms of a single account. Probably what's more predictive and more heavily weighted is what we call the average [indiscernible] file of your credit report. So let's say, you have 10 credit accounts on your credit report. One of them is a [indiscernible] card 30 years ago, but the other 9 are credit cards and some of lines that you opened in the last year. So when we look at the average time in [indiscernible] those 10 obligations, it's not as deep as the 30 years ago on the [indiscernible] card. So you'll get some points for having that 30-year history, but you're probably going to get more or less points for having a loads of [indiscernible] length of average credit history on it all. So the actions you can take with here is only applied for credit when absolutely needed, so that your negative kind of history [indiscernible] and that will help your score over time. So that's the way to turn those things in the third category here. The fourth category is what we call pursuing new credit. And here we're looking at numbers and the number of new accounts have been in the last year by the type of trade it is with revolving versus installing. We've talked a lot about inquiries, but just to cover more points on those is, again, we're only looking at inquires posted in the last 12 months. And we have logic in the score that treats inquiries associated with rate shopping differently than a stand-alone inquiry. So if you go out this weekend to shop for a card and finance it, most likely, the dealer is going to do what's called shot gunning your credit report through several different lenders they have a relationship with, to give you the loan. And each of those lenders that have been shot gunned will pull your credit report and score to see what kind of financing they can provide the dealership. And so the model is smart enough to know, hey, Joe Smith is not applying for six car loans here. This is all associated with one car loan. So we have logic in the model, which will group those similar inquiries for rate shopping and treat them as a single search for credit. And the same thing with mortgage. If any of you have ever gone through a mortgage escrow process, the lender will sometimes pull your credit report multiple times in that 30- to 45-day period from when you make the offer to when it actually goes to escrow to make sure that everything is good and not changing on your credit report. So for mortgage identified inquiries, we have what's called a bypass period where we look in the last 30 to 45 days, and all inquiries that were related to mortgage or student loan are bypassed and accounted to accommodate for that [indiscernible]. So again, a lot of calls from consumers are focusing themselves on number of points lost due to the inquiries. The advice to give them as well as you is to not focus on inquiries but to focus in on paying bills on time as well as reducing the debt. That's what's going to give your score the biggest boost. Then the last category is credit mix. So basically, what we find is that consumers that show they can manage different types of credit products successfully and on time are a little bit less risky than the consumers who don't. So as the consumer you always show that they can manage their revolving credit as well as installment credit. And so that's what's meant by credit mix. Again, this only represents 10% of the score. So again, it's one of the things that you should be aware of, but definitely not necessarily focus on as you're trying to improve your scoring. So how do you found that information helpful and you mystified certain things about the credit score, you learned something new. Real quick, we'll just go into a quicker view of credit score dynamics. So a lot of the information that I've been sharing with you is kind of educational than noted in nature, and it's applicable in real life but hard to see. But this slide provides you a real-life example of how having a higher FICO score has real benefits in terms of running [indiscernible]. So this is a table, a non-savings calculator table that says assume that you're applying for $275,000 mortgage loan for 30-year [ fixed, ] and it lists a bunch of interest rates by FICO Score Tier. So in the middle table, you can see on step 3, it shows that if you have lower FICO scores, your interest rate is going to be higher than if you have a higher FICO Score. And then the table in step 4 says if your current score is in that score range, and let's say, your score is 650, what savings opportunities might you observe if you were to get your score up to 750 or 740, et cetera. And then it shows you the interest rate savings that can be realized with that movement of your score up to a higher tier. So as you can see that the savings and interest rate fees over the life of loans can be close to $100,000 of highest tier. And that's a lot of money and this real benefit in terms of having a higher FICO Score. So if you're in a process of getting a -- thinking about getting a mortgage loan or a car loan, et cetera, it pays that go out and play these calculators to see how much you could potentially say, increase your score in the near future growth and be more attractive to lenders. And the last section before we switch over to Operation HOPE is protecting your credit. So obviously, with the coronavirus situation that we all have to deal with in the past several years, it impacted many people's ability to pay for credit or loss of jobs, et cetera. So if you find yourself financially impacted not only by something like a pandemic, which is hopefully, once in a lifetime experience to be a part of, but if you live near an area that has, let's say, hurricanes or tornadoes and natural disaster striking and they impact your ability to paying in these situation, increasing the expense, you've got to let your lenders know. That's the number one message here is the lenders have programs they've created through these kind of situations. And they want to help you, and they need to know and hear from you to be able to help you. So if you are in a situation where you're running into some type of obstacles due to big natural disasters, pick up the phone and call your lender, and they have programs that will help you. [ Until ] the most common or what's called a forbearance or a deferred payment plan. So basically, these two programs will enable you to either reduce the amount of money that you have to pay for a certain time period or allow you to defer payment. It's not a freebie, you'll have to make it up eventually, but they will usually work with you to do that. And the good news is being in one of these programs will not impact your FICO Score negatively. They have certain codes that they report on the consumers that are in forbearance or deferment payment plan. And our models will bypass that in terms of considering that you [ made them. ] Again, it's in your best interest to reach out if you have any find yourself in one of those situations. So I know there's a lot of information to sit through and take notes and stay focused on. So this slide, again, the [indiscernible] will be available to you provides a list of different resources that my FICO and FICO has regarding credit education and scoring, how it all works. So I encourage you to take a look at these resources and reserve. I mean we find a lot of good information out there that can help you as you lay the foundation for your score increase program. So what I'd like to do next is turn this over to Yolanda, who can provide you with information about the great services that Operation HOPE has and then you should definitely consider taking advantage of. Yolanda, the floor is yours.

Thank you so much, Tom. Good evening, everyone. My name is Yolanda Butler, and I work at Operation HOPE, and I've been there for 10 years in various capacities, and I am a financial wellbeing coach there. I want to share with you information about Operation HOPE and how you can connect the dots with what Tom has said to you regarding your FICO score and the services of Operation HOPE. Operation HOPE has been in business for 31 years. I count that an honor to be a part of it. I've been a part for 10 years. So the first thing I want you to focus on is that Operation HOPE has credibility. We've been doing this for 31 years. You're on this call, because you're looking to find out more information about purchasing a home. We've coached people for 31 years in this area. I wasn't a part of HOPE at that time, but I remember in my early years seeing where Operation HOPE started. And we used to be on The Oprah Winfrey Show. Mr. Bryant used to be there, and he was saying, no loans denied. And we are able to say no loans denied merely because we had competent and caring coaches. When I say competent, I'm actually speaking of the fact that we have coaches that have backgrounds in homeownership, many of them have worked in various capacities of homeownership on our team. You can move to the next slide, Tom. Many of them have worked in various capacities of homeownership. Many have worked with credit. And so when you come to Operation HOPE to work with us, we want to make sure that we are giving you current information, credible information. So what could you expect with the home ownership coach? We have an 8-hour HUD-certified program. Let me say that again. We have an 8-hour HUD-certified program. All of our services are no cost. When you meet with our HUD coaches and you go through the homeownership workshop program and then if you choose to decide to work with the coach, we're going to get you ready in terms of being able to buy a home. It's more than just the FICO credit score. It's making sure that you meet the benchmarks and the milestones for homeownership. And our program also involves allowing you to be prepared to be a sustainable homeowner. We don't just want to see you have the credit score and then be able to qualify to buy a home, but we want to be able to look years down the road to see as Keon said earlier that you're building a legacy in your family for homeownership. Now also, when I say competent in hearing and we have a homeownership program -- certified program, I want you to understand that if you choose to work with us, we have the capacity, and you can move to the next slide for that one. When I'm saying the capacity, not only are our coach is competent in the subject matter and they care, but our capacity in terms of how Operation HOPE is built out, we're nationwide. So here are some of the choices that you will be able to make in terms of working with our team. We can work with you virtually if that would be your choice. We can work with you in person. And merely to work with our team in person, you would need to go to our website, and I'm sure it's going to be information in the chat. But I'll just chat it out right now at www.operationhope.org where you will be able to actually self-select a coach in your area if you chose to meet with someone in person. Also, our capacity is such that we not only work with people in English, but we have coaches that speak other languages. So if you're on this webinar today and you speak Spanish, you speak Asian Pacific, all other dialects, we have the capacity to be able to handle that. And so we're really excited to be a part of this. Some of the people that partner with Operation HOPE, just so you understand who buys into what we do, we have corporations, we have philanthropic people, but most importantly, I'm impressed that the CEO and founder, Mr. Bryant, also pours money right back into this company to be able to offer the services that we have. So again, Operation HOPE is credible. We've been around for 31 years. We're competent in our subject matter. We care, we want to see you succeed in homeownership and create that financial wealth, and we have the capacity to do so. And yes, I'm just excited about this, and we look forward to working with you. Thank you so much, Tom.

Thanks, Yolanda. You guys do some great work there, and I hope everyone is able to take advantage of it. So Jessica, I'll turn it over to you.

[Operator Instructions] Our first question is, is it possible to get a perfect credit score, and what is that number?

So the answer is yes. And for most of the FICO scores, that perfect number or perfect score is 850. However, the target goal of having a perfect score is, I guess, good for bragging rights, but that's about it, because the lenders do not require a perfect score to make a good credit decision. So for consumers who are scoring anywhere from, let's say, 760 and higher will typically be getting very attractive offers of credit based on their score. So you don't need an 850 to have -- to get good credit.

Our next question for you is: I would like to subscribe to myFICO's monthly credit monitoring with all 3 scores, but the cost is prohibitive. Does FICO ever run promotions that reduce the cost?

No, we do not run promotions, but that's something that I can take back to the product team as feedback and -- but you can get your free FICO score on myFICO, it's the FICO is score based on [indiscernible] data. And then on Experian, you can get access to your free FICO Score. It's the FICO scoring based on Experian data. So there are [indiscernible] out there to get access to your free Score, just not in a subscription service you as requested.

I'd like to add one to that, Tom. You can actually go to www.creditchecktotal.com, again at www.creditchecktotal.com. There, you will be able to get all 3 FICO scores and your FICO report for $1. Now just like Tom said, it is a subscription. So you would want to make sure that once you got that report are those reports that you canceled, and you would be able to do that by phone, or you could do it by e-mail. And from my experience, that's just a onetime thing. If you wanted to get that again, it's based on an e-mail, so you would need to put in another e-mail address to be able to get all 3 of those, www.creditchecktotal.com.

I have another question here. The question is: I have several credit cards with balances. What's the best strategy for paying them down?

So I think that's a perfect question for you, Yolanda as you and your expertise and your team of expertise can look at that and -- over the plan.

Yes. So there are a couple of strategies. We probably want to look at your whole credit report, but let me just tell you some things to think about. Tom mentioned one of them in terms of how you pay the debt down in terms of Avalanche snowball highest interest rate, but there's a balance transfer. Now if you have a pretty decent credit score and normally with the balance transfers, you want to be looking for the promotional periods. A lot of times, it's a 0% interest rate. They'll give you a certain amount of time to be able to make these transfers. And that is one way, because what it will allow you to do is to bring down the utilization on a card. My caution would be this, when you're looking at a balance transfer, sometimes because I've had this experience myself one time and I was pretty upset, I put in for a balance transfer and I only wanted to do $1,000 and the company gave me a card for $1,000. If you understand what that meant, that's a 100% utilization that you're using. So that wasn't really good. And I tried to fight it, but it is what it was. Secondly, what you could do, you could actually -- if you had your credit card for a pretty good while, you could ask for a credit line increase. With the credit line increase, that would bring your utilization down, and it would allow you to pay down your card within your budget without trying to bring it down in chunks at a time. So those are two strategies you can consider.

Well, what a great session we just had. I want to thank our presenters, Tom and Yolanda. You both did an amazing job. We are getting to the end of the session now. And I also want to thank our awesome Operation HOPE coaches who are answering questions in the Q&A. Hopefully, everyone takes advantage of the opportunities that Operation HOPE is offering. I also want to let you all know that we will be sending out a survey to get feedback on how we did and to get your thoughts about the session. So please be on the look out for that. as we would greatly appreciate your feedback and your opinions. So thank you, everyone, for joining us. We really enjoy doing this session. Please be on the look out for more of these. You can find more tips and information on our social media accounts. We are on Instagram at FICO Score a better future, and Facebook, Twitter and LinkedIn at FICO. And so thanks, again, for all of our speakers and all of our participants, we really appreciate it. Have a great evening, everyone.