FICO Scores is a system that helps lenders make accurate, reliable and fast credit risk decisions across the customer lifecycle. This credit risk score rank-orders consumers by how likely they are to pay their credit obligations as agreed upon between the consumer and lender. The most widely used broad-based risk score; the FICO® Score plays an important role in billions of decisions each year.
FICO Scores are available for lenders via its network of credit agency partners. Lenders who are interested in licensing and pricing details can contact their local credit reporting agency for details.
What’s in My FICO® Score?
FICO Scores are calculated with the use of many different pieces of credit data in your credit report. This data is grouped into five categories which include: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%)
The percentages above depict how important each of the categories is, in determining how your FICO Scores are calculated. The importance of these categories may differ from one individual to another.
Your FICO Scores considers both the positive and negative information in your credit report. Late payments will lower your FICO Scores, although establishing. Or re-establishing a good track record of making. On-time payments will boost your credit score.
The Importance of Credit Categories Varies by Person
Your FICO Scores are unique. They are based on the five areas above. But for some people, the importance of these categories can be quite different.
Also, as the details in your credit report changes. So does these factors in determining your FICO Scores.
Your credit report and FICO Scores evolve frequently, as such it is not possible to gauge the exact impact of a single factor in how your FICO Score is calculated without looking at your entire report.
The Main Factors In a Credit Score Are:
Creditors would want to know as much about you as possible. This includes your name, address, postcode, salary, and whether you are single, have a family, rent your home or own it outright. All this helps the lender in deciding whether or not to extend credit to you.
Your credit history details what you have done in the past. If you have always paid your debts, your credit history will reflect that and you’ll likely have a good credit score. On the other hand, if you have outstanding debts, multiple loans and patchy repayment history, then it may not be a good one.
If you have very few enquiries in your credit profile, then it shows a lender that you are in charge of your finances, which is likely to reflect in your score.
Every time you apply for credit, you leave behind a memory. This means that every time a lender, employer, insurer, landlord, or debt collection company looks into your credit profile, they also leave a memory. Having lots of enquiries over a short time frame will make it appear that you are desperate for credit or are struggling with bill payments.
Event like County Court Judgements (CCJs) can also leave marks on your record and will harm your score. However, on the bright side, there are other public records that can help your financial reputation. Being on the electoral register is one-way lenders run a check on you at your live given address. They’ll also make use of public records to see if you’ve had your identity stolen.