| How Did I Get My Credit Score |
| By Credit Federal |
Published
09/4/2009
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Credit Report
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What is my FICO score, how did I get my score, and tips on how to improve credit scores
FICO scores are calculated from these five areas: debts owed, types of credit, payment history, length of credit, and new credit. Each one of these areas are used to get a "FICO score".
How much you owe in debts plays a big part in a FICO score. If you don't have much credit but you have tons of debts, that is not good. It can mean you will have lower FICO scores which means not getting approved for loans or you may get approved for loans with high interest rates. Paying debts late, skipping payments, or not paying debts at all, can have a negative effect on FICO scores.
Other areas like public records which involve bankruptcy, judgments, suits, liens, wage garnishments, collections, and delinquent accounts will contribute in a negative way and scores may be lowered. Consumers have 3 FICO scores based on their 3 credit reports and you must purchase FICO scores. These are what creditors look at to decide whether or not they will give you credit or credit with good terms.
FICO scores of 750 or more may be the ideal starting point when seeking credit. Many creditors are requiring 750 and above. It can be a good idea to purchase at least one FICO score before applying for a loan, so you can see what the creditor will see. Scores can tell a lot about a person's financial habits.
How much you owe in debts, payments that are made, and the type of debt are factors that influence scores. If excessive debt is owed and the credit limit is already maxed out, it could signal financial problems or that not much is being done to pay down the debts. Consumers should strive to keep debts at about 30% of their available credit limit.
Credit history that is long and has good payment history is a benefit. Always keep credit cards that have years of good history even if you don't make charges on the card often. This is like getting an "A" on a report card. There is no need to close accounts that are not used, especially those with positive reports to the credit bureaus. This has a positive affect on FICO scores.
Apply for too much new credit is another factor that affects FICO scores. When your credit is not so good and you keep applying for loans and credit cards, it could signal financial problems. The number of inquiries to apply for new credit, the length of time for the new credit, the types of credit applied for, and payment history all factor into the scores.
To get a FICO score, all areas of information in your credit report are important as a whole. When your credit information changes, so can your FICO scores. There is not one single bit of information or area in credit reports that determine the scores. Since creditors look at your FICO scores, it can benefit consumers to purchase at least one FICO score to see what creditors see.
More FICO score and credit report information and tips to improve credit scores:
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