If you're wondering what your Fico score is, you're not alone. FICO's scoring algorithm has been modified many times over the years since its introduction in 1989. FICO is constantly updated by lenders. These versions allow them to decide whether or not to increase your FICO score. Here are some facts about your FICO score.
Payment history
FICO scores can be affected by many things, but two key factors are credit utilization as well as payment history. Both these factors are affected by the amount you owe in relation to what you have. Also, both factors have something to do with your credit mix, which refers to how many different types of accounts and loans you have.
Payment history is most important among all of these factors. To assess the creditworthiness of a potential borrower, more than 90% use it. It is essential to pay on-time on all accounts, current and old. FICO research has shown this to be the best predictor of someone's ability repay debt. Collection accounts and bankruptcy are part of a person’s payment history and can harm their scores.
Accounts owed
FICO scores are calculated from pieces of data in a credit report. They can be broken down into several different categories based upon how much debt a person has, and how often they have made payment. Because it shows how well a person has paid their debts over time, payment history is important. Accounts owed is a measure of how late or missed payments a person has made.
Fico scores, and accounts owed, are closely related. Each one can have an impact on the other. But a high balance does NOT necessarily mean you're in serious financial trouble. A high percentage of debt can mean that you are in too much debt. It can make it hard to make your monthly payments.
Credit history length
There are many factors to consider when determining your credit score. The longer your credit history is, the better. Lenders are more interested in long-term payment histories. Lenders also consider the frequency you open new accounts. Lenders may be concerned that you won't pay your new debt if there is a history of paying on time.
Your score can be affected by the age and history of your accounts, but it isn't as important as other factors. It is possible to have low scores without a lot history. However, the more history you have, the higher your FICO score. Your age can also impact the importance of other factors that affect your score.
Credit mix
Diversifying credit sources can help improve Fico scores. This involves taking out loans that are different from revolving credit. Combining installment and flexible credit is the best form of credit. Even if your credit balance is small, you can improve your FICO Score by using a combination of both installment and revolving credit.
A credit card is a good option, along with revolving or installment accounts. This type of revolving credit can improve your credit score, which will be essential for future loan applications. If your credit rating is still low, it's best to not apply for too much credit cards. Rejections can have a negative impact on your credit score.
New credit
Your new credit score is a part of your credit report that contains information about new credit accounts. A new account means an account you have opened within the last six- to twelve months. If your application was denied, your credit score will be affected. This information can also affect eligibility for new credit cards, or loans.
More than 80 million people will be affected by the new scoring system. Some of these consumers will see increases in their scores while others will see decreases. People who are late on their payments will see a major impact from the changes. Personal loans are especially at risk since they do not require collateral.