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Facts About Your FICO

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FICO Credit Score

A credit score is a number that represents the credit worthiness of an individual. The three digit number lets lenders decide how likely it is they’ll be paid on time. Obviously, the higher your number the more creditworthy lenders regard your requests.

There are three credit reporting agencies that will provide you with a copy of your report on an annual basis for no cost. FICO is an acronym created by the Fair Isaac

Corporation Score. Lenders use this score along with other details when deciding whether to extend credit. The Fair Isaac Corporation Score is a major analytic software company providing services and products to consumers and businesses. The scores range from 300 to 850.

Fair Isaac Company has developed a new method called 'NextGen FICO 2.0', which they say addresses important credit trends by improving score accuracy and maintaining predictive power.

Fico Criteria

FICO standard score include the following range:

  • Excellent - 750-850
  • Good - 660-749
  • Fair 620-659
  • Poor - 340-619

Credit Score Facts

The exact formula for your FICO credit score is unknown, but we do know several components, including:

  • Payment history makes up 35%
  • Debt burden is 30%
  • Length of your history is 15%
  • Types of credit is 10%
  • Recent credit searches is 10%

Your payment history is probably the most important thing, so paying your bills on time will improve your score. Your current revolving debt, such as the balances owed is considered. If you can pay off revolving debt it will lower the credit utilization ratio and increase your score. However, closing a revolving account will typically adversely affect the ratio, which will have a negative impact on your FICO credit score.

Your score can benefit from managing different types of credit, (i.e. installment, revolving, consumer finance and mortgage). Shopping for a mortgage or auto loan over a short period of time will probably not decrease your score as a result of these inquiries.

All credit inquiries are recorded and displayed on your credit report for a period of time. However, an individual doing self-checks, an inquiry by an employer for employee verification or companies initiating pre-screened offers of credit or insurance do not impact your credit score.

There are a couple of other special circumstances that can negatively impact your FICO score. Money that is owed because of a court judgment or a tax lien does carry an additional negative penalty, particularly when recent. Having one or more newly opened consumer finance credit accounts may also have a negative impact.

Finding Your Credit Rating

FICO scores are between 300 and 850, and 60% of the scores are right between 650 and 799 with the median score of 723.

The three major credit agencies utilize the score generated with their data differently:

You can get all three of these ratings at CheckFreeScore.


Raise Your Credit Score

There are some ways to improve your FICO score. First, get a copy of all three credit reports and your FICO credit score. This will clearly show you what you need to pay off first.

If you are paying on a collection account, there will be a negative impact on your score, and this is the first thing to pay off. Of course, delinquent accounts are listed on your credit report in a column called "Past Due". If you see anything in this column on your credit report, pay it off as soon as possible.

Charge-offs and liens within the past 24 months will severely damage your credit so it's very important to pay these off also. However, if these are older than 24 months, it does not negatively impact your credit. Prioritize and pay your past due balances first, then pay any collection agencies, while asking them to remove all references listed by the credit bureau.

You can request a good faith adjustment from your creditor when you have late payments and ask them to remove the negative information from your credit report. Persistence usually pays off in case they refuse to remove these late payments. Remind them that you had been a good customer and would deeply appreciate their help. Most creditors receive calls at a call center, so if the representative you're speaking with refuses to make a courtesy adjustment, call back and try again with someone else as your persistence and politeness can often pay off.

Make sure your creditors report your credit limits to credit bureaus, because if no credit limit is reported the software used by the credit agencies often show your account has “maxed out.” As an example if you have a $10,000 credit card limit, which doesn't show on your credit report, your score can be damaged as severely as if you are carrying this whole balance. Ideally, you want to keep money owed under 70% of your total credit limit, and 50% is even better and 30% the best.

Generally do not close your credit cards, as this will hurt your credit score ratings. For example, if you have credit card debt of $15,000 and your total credit is $30,000, you are using 50% of your total credit. If you close a card with a $10,000 limit, you change your ratio to using 66% of your credit, which will hurt your credit score. If you have more than six department store credit cards, you can close the newest account, but don't close the rest.

Keep your old credit cards current even if you're not using them anymore. Use them once or twice a year so the bank doesn't close them as this positively affects your long-term credit rating.

Establishing New Credit

If you don't have a credit card, you should get one to build your credit history, but if your credit is not adequate, try getting a secured card. A bank will typically charge $500 for a VISA card. The $500 sits in an account at the bank. Use the card each month, and pay it off in full. It is not necessary to carry a balance.

Another excellent way to improve your credit is to get an installment loan, which can consist of personal loans, automobile loans, mortgages and student loans. Be very careful when getting a new loan. The payment should be an amount that you can easily afford.

In Summary

I know many people are in bad shape financially, especially since COVID-19 has lasted so long. Some people have to resort to the use of credit cards for groceries. The most important thing is to at least make a payment every month. You are entitled to a free credit report from one of the agencies annually.

Your credit is something that you need to treasure, because once you ruin your credit it is a long process to regain a good credit score.


This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2020 Pamela Oglesby


Pamela Oglesby (author) from Sunny Florida on December 06, 2020:

Hi Alyssa,

I do think it is important to know how to raise your credit score if it is lower than you want it. I appreciate your comments. Have a wonderful week!

Alyssa from Ohio on December 05, 2020:

Credit scores have an air of mystery and magic surrounding them. This article made it much easier to understand. I love that you included ideas on how to raise the score as well as information about how to establish credit.

Pamela Oglesby (author) from Sunny Florida on December 05, 2020:

Hi Lora,

You are right about repairing your credit. I know it is hard for some to pay their bills at this time. Thank you for commenting. Have a wonderful weekend.

Pamela Oglesby (author) from Sunny Florida on December 05, 2020:

Hi Linda,

That is so true Linda. I appreciate your comments. Have a wonderful weekend.

Pamela Oglesby (author) from Sunny Florida on December 05, 2020:

Hi Manatita,

Experian is just one of many agencies that give a FICO score. I pray that the future will get easier for you and many others. Thanks for your comments. God bless you.

Lora Hollings on December 04, 2020:

Excellent article, Pamela. You give some very good tips on how to raise your FICO and how to build your credit rating. It’s always good to remember to live within your means and paying your bills on time. It is much harder to repair your credit rating than to avoid getting a bad one in the first place. You cover this topic very well and provide simple strategies to improve your credit rating. Thanks for sharing!

Linda Crampton from British Columbia, Canada on December 04, 2020:

It's always good to know how to manage a credit card. Thank you for sharing the information and your advice, Pamela.

manatita44 from london on December 04, 2020:

I'm in bad financial shape myself, Pamela, but I won't get another credit card. Lessons well learnt. FICO seem to be the equivalent of Experian here. Well-informed Article.

Pamela Oglesby (author) from Sunny Florida on December 04, 2020:

Hi Brenda,

The karma program sounds terrific. It is great to be able to disute an error. Thank you so much for your comments. Have a wonderful weekend.

Pamela Oglesby (author) from Sunny Florida on December 04, 2020:

Hi Peggy,

You are right. I do appreciate your comments. I was deleting some older articles this morning and found this one unpublished. I didn't think the other one was so recent, but it is really my mistake. I am working on two other articles. I think I have too many 'irons in the fire' as they say.

Have a wonderful weekend, Peggy.

BRENDA ARLEDGE from Washington Court House on December 04, 2020:

This article is very informative and it helps others to know what the range is for their score.

Also getting the free reports each year is something I used to do.

I would say it's a great resource.

I check mine on credit karma which one can access online.

I can even dispute something if it's wrong with a click or tap on my phone.

I recently had paid off a balance and it wasnt listed.

This got it fixed quickly.

It's great having good credit...excellent is the best.

Nice write.

Peggy Woods from Houston, Texas on December 04, 2020:

You must have reworked this article because I know that I had commented on an earlier one. You have given excellent advice here, Pamela.

Pamela Oglesby (author) from Sunny Florida on December 04, 2020:

Hi Bill,

Steve and I are in the excellent range too. Thank goodness everything is paid off right now. Thank you so much for your comments. I hope you have a wonderful weekend too.

Bill Holland from Olympia, WA on December 04, 2020:

Bev and I are both in the excellent range. Good thing, too, because I would be running out of time to get that score to change. :) Nice summary, my friend. Have a wonderful weekend.

Pamela Oglesby (author) from Sunny Florida on December 04, 2020:

Hi Adrienne,

I think it is hard for many people. It is good to just to pay something if you can. Thanks for commenting. Stay healthy and safe.

Pamela Oglesby (author) from Sunny Florida on December 04, 2020:

Hi Flourish,

That is a good question. I imagine many are finding credit difficult right now. I appreciate you comments. Stay healthy and safe.

Pamela Oglesby (author) from Sunny Florida on December 04, 2020:

Hi Liz,

you are right. I know many are suffering. Thanks for your comments. Stay heathy and safe.

Adrienne Farricelli on December 04, 2020:

This is such a critical time and your article is very helpful. Your advice to pay off at least one credit card payment each month is very important. I can see how things may easily get out of hand if such payments are skipped.

FlourishAnyway from USA on December 04, 2020:

I bet with the pandemic, average FICO scores will really take a hit. Young people could really use help in establishing credit and understanding the information you presented rather than learning it the hard way. I often wonder what people without a firm foundation (good role models) do and how they are supposed to learn this information.

Liz Westwood from UK on December 04, 2020:

This is a detailed and very helpful article. Sadly it is very relevant for many in these hard times.