In general, a longer credit history will increase your FICO Score, all else being equal. A long history of demonstrating consistent payments on credit accounts is a good way to show lenders you can responsibly manage additional credit. Having credit accounts with an outstanding balance does not necessarily mean you are a high-risk borrower with a low FICO Score. FICO's research shows that people using a high percentage of their available credit limits are more likely to have trouble making some payments now or in the near future, compared to people using a lower level of credit. While lenders determine how much credit they are willing to provide, you control how much you use. For example, if you have a $2,000 balance on one card and a $3,000 balance on another, and each card has a $5,000 limit, your credit utilization rate would be 50%.
How much is still owed on installment loan accounts, compared with the original loan amounts.Ĭredit utilization, one of the most important factors evaluated in this category, considers the amount you owe compared to how much credit you have available.How much of the total credit line is being used on credit cards and other revolving credit accounts.The number of accounts where you carry a balance.Whether you are showing a balance on certain types of accounts.The amount owed on all accounts of every type.The number of accounts that show no late payments or are currently paid as agreed.Public record and collection items – reports of events like bankruptcies, foreclosures, wage attachments, liens and judgments.Payment info on credit card accounts retail accounts, like department store credit cards installment loans, such as car or mortgage loans finance company accounts.Whether positive or negative, the importance of any singular factor depends on the information in your entire credit report. Older credit problems count for less – Past credit problems on your FICO Score fade as time passes and recent good payment patterns show up.Ī FICO score takes into account five categories of information in a credit report.Credit decisions are fairer – Lenders can only focus on facts related to credit risk and not opinions or biases.Get credit faster – FICO Scores can be delivered almost instantaneously, speeding up credit card and loan approvals.Having a good FICO Score can put you in a better position to qualify for credit or better terms in the future. Addressing some or all of these score factors can help you improve your financial health over time.
It also helps you obtain credit based on your actual borrowing and repayment history without consideration of prohibited types of information, such as race or religion.įICO Scores include "score factors" that affect the score. Lenders use the FICO® Score to estimate your credit risk – how likely you are to pay your credit obligations as agreed.
It summarizes information in your credit report into a three-digit number that lenders can use to assess your credit risk quickly, consistently, objectively and fairly. A FICO Score is a three-digit number calculated from the credit information on your credit report at a particular point in time.
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