F.I.C.O.
Fair Isaac Corporation
WHAT IS A FICO SCORE USED FOR?
When a consumer applies for credit – whether for a credit card, an auto loan, or a mortgage – lenders want to know what risk they'd take by loaning money. A credit score helps lenders evaluate a credit report because it is a number that summarizes credit risk.
WHAT MAKES UP YOUR FICO SCORE?
- New Credit- 10%
- Length of Credit History- 15%
- Credit mix- 10%
- Payment History- 35%
- Accounts Owned- 30%
WHAT IS THE RANGE FOR A FICO SCORE?
- Base scores range from 300-850
- Higher is better
- Having no credit history can be a red flag!
WHAT CAN AFFECT YOUR SCORE?
DEFAULTING
A default shows that you have not fulfilled your end of the loan contract.
FILING FOR BANK-RUPTCY
Bankruptcy will harm your credit score. It's a good idea to seek alternatives, like consumer credit counseling.
MAXING OUT
Maxed out and over-the-limit credit card balances make your credit utilization 100%. This is least ideal for your credit score.
RAISING YOUR SCORE
- Check your limits- Make sure your reported credit limits are current vs. lower than they actually are
- Get a credit card- Having one or two pieces of plastic will do good things to your score – if you don’t charge too much and if you pay your bills on time. In other words, be a responsible user of credit.
- Dispute errors- Mistakes happen. You can dispute errors online through Equifax, Experian, and TransUnion.