Your FICO® credit score is your credit rating. You have three FICO® credit scores, one from each of the three major credit bureaus. The FICO® credit score system assigns points to factors that help predict who is likely to repay a debt, and make the payments when due. The FICO® credit score ranges from the mid 300’s to the mid 800’s, with higher credit scores being better. The median credit score in the U.S. is 729.
You may be asking, “What goes into my credit score?” And whether you need clean credit in order to have a good credit score.
The following areas will weigh positively on your credit score:
- Records showing all payments were on time;
- Long-established accounts.
An insufficient credit history may have a negative effect on your credit score, but that can be offset by other factors, such as timely payments and low balances.
The following areas will weigh negatively on your credit score:
- Reported delinquencies, especially if severe and recent;
- Revolving bank accounts – lack of accounts, or too many accounts;
- Too many credit card accounts with balances;
- Loans from finance companies;
- Too many inquiries from potential credit grantors;
- Too many new accounts;
- High proportion of balance to credit limit;
- No recent (non-mortgage) account balance information.
Keep in mind…
- Your credit score is likely to go down by a few points with each inquiry by potential credit grantors. (Inquiries by YOU do not affect YOUR score.)
- Your credit score will change with the age, balance, and status of your credit accounts.
- Lenders use different or custom scoring systems, so the numbers will vary, and may be meaningless to you.
- Some companies do not use credit scores.