Breaking Down Your FICO Score

Understanding Your Credit Report And Credit Score -- Part 3

What does a FICO score take into consideration?

Your FICO score only looks at information in your credit report and considers both the positive and the negative information on the report including:

Payment History – (accounts for about 35%)

• On-time payments on credit accounts including credit cards, retail accounts (such as department store credit cards), installment loans (loans where you make regular payments, like car loans) and mortgage loans.
• Late payments (delinquencies) on credit accounts including how late the payments were, how much was owed, how recently the late payments occurred and how many times payments were late.
• Public record and collection items including delinquency payments on utility bills that are sent to collection agencies, bankruptcies, foreclosures, lawsuits, wage attachments, liens and judgments. (Older items and items with small amounts will count less than recent items or those with larger amounts.)

Amount of credit – (accounts for about 30%)

• The total amount owed on each account, in addition to the overall amount you owe.
• Having balances on certain accounts. (Having a very small balance without missing a payment shows that you have managed credit responsibly, and may be slightly better than carrying no balance at all.)
• The number of accounts that have balances. (A large number can indicate higher risk of over-extension.)

Length of Credit History – (accounts for about 15%)

• The age of your oldest account and the average age of all of your accounts.
• How long it has been since you used certain accounts.

New Credit – (accounts for about 10%)

• How many new accounts you have or how long it has been since you opened a new account.
• How many requests for credit you have made in the last 12 months.
• How long it has been since a lender made a credit report inquiry.
• Whether you have repaired your credit history, following past payment problems.

Types of Credit - (accounts for about 10%)

• What type of credit accounts you have, and how many of each type. This includes:
  • Revolving credit – American Express, Visa, MasterCard, Discover Card, and department store cards.
  • Installment credit – Personal loans, car loans, student loans and mortgages.

What FICO Scores Do Not Look At:

• Age, race, sex, religion, nationality, medical history, criminal history, and marital status.
• Salary, occupation, title, employer, date employed or employment history.
• Interest rates being charged on a particular credit card or account.
• Support obligations, rental agreements or utility payments.
• Requests you make, requests from employers, and requests lenders make without your knowledge.
• Information that is not found in your credit report.

WKFCU Looks At The Big Picture

When you apply for a loan at your credit union, we will pull your credit report and look at your FICO score. We also consider your length of employment, your history with the credit union, whether or not you have direct deposit or payroll deduction with us and your active credit union accounts before making a decision. Your credit union sees you as a valuable member, not just a credit score. A local person makes all lending decisions, not a computer or someone far away in a home office.

Next week - Improving and Disputing Your Score

(Reprinted in part from https://www.dfs.ny.gov/consumer/creditreport.htm)