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What's in a FICO Score

What's in a FICO Score

Your FICO® score is the standard credit score used in more than 90% of lending decisions in the United States and it's also an important factor in the approval or declination of a Merchant Account. With FICO® 's motto being "The Score That Matters®," it's important to understand what actually determines the FICO®  score.

History: Founded in 1956 as Fair, Isaac and Company by engineer Bill Fair and mathematician Earl Isaac as a pioneering credit score company. In 2003, the company was renamed to Fair Isaac Corporation and in 2009, the company rebranded again to FICO® . (Source: Wikipedia)

There are 5 factors that determine your FICO®  Score and below is a great visual that explains each factor.

FICO Score Factors - Lucrazon

However, keep in mind that the importance of categories will vary for each person. For instance, people who haven't used credit long vs people with a longer credit history.

New Credit (10%) - Opening multiple credit accounts in a short period of time represents a greater risk. Particularly for those that do not have a long credit history.

Types of Credit In Use (10%) - The score will look at the credit variety in use. For example, credit cards, retail credit cards, installment loans, mortgage loans etc.

Length of Credit History (15%) - Typically, the longer your credit history is, the better your FICO®  score will be. However, it depends on how the rest of the credit report looks. It will take into account:

- Age of oldest account, age of newest account, and an average age of all your accounts
- how long specific credit accounts have been established
- how long it's been since you used certain accounts

Amounts Owed (30%) - Owing money on the accounts may not necessarily mean you're a high risk borrow but if a high percentage of your available credit is used, it can indicate that you're more likely to make late or miss payments. Futher explanation is provided by

Payment History (35%) - This is the first thing that lenders want to know and one of the most important factors in a FICO®  score is whether or not you paid past credit accounts on time.

Sometimes credit reports will have mistakes or contain errors, so it's very important to look at your report in detail and make sure your information and credit accounts are correct. You may discover that some accounts are still open when you thought you already closed them etc. Regardless, if you find that you do see mistakes, each of the credit reporting companies have online dispute forms to state your case.

Ready to take a look at your credit report? You can request a free copy every 12 months from EACH credit reporting company - EquifaxExperian and TransUnion. The only source is at Annual Credit Report which is backed by the 3 major credit reporting companies.


+Alice Ly

Social Media Manager

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