5 things you may not know about your FICO score

If you are applying for a loan or purchasing a new car or home in the near future, you are probably very interested in your FICO® score. Your FICO score is the three-digit number on your credit report that tells creditors how much of a credit risk you may be. The higher your FICO score, the less of a risk you seem and the better your credit rating.

If you have negative items on your credit reports, they will impact your FICO score. But how long do these negative items stay on your credit reports, and how much do they impact your score?

Here are five things you may not know about your FICO score:

1. Payment history is a big deal

There are five major factors that determine your FICO score:

• Payment history (35% of your score)—Do you make your payments on time? If not, these accounts may show up as negative items on your credit reports.
• Amount owed (30%)—How much debt are you currently carrying?
• Length of credit history (15%)—Are you a new borrower, or do you have a long track record?
• New credit (10%)—How many accounts have you opened recently? Opening several in a short time creates more risk.
• Credit mix (10%)—Do you have a variety of credit accounts? A good mix of different types of credit accounts is better for your score.

If you are repairing your credit, make your payment history an important priority. When you are late on payments to multiple credit accounts, each late payment will be counted separately and could majorly impact your credit score.

2. The average FICO score is 700

Your personal score can fall into five FICO scoring ranges:

• 800-850: Exceptional
• 740-799: Very Good
• 670-739: Good
• 580-669: Fair
• 300-579: Poor

Most people have a score between 580 to 800. FICO scores do not go lower than 300, but some people do not have a FICO score at all because they have not established any credit. Only about 0.5% of people have achieved a perfect credit score of 850.

3. Negative items can stay on your credit report for 7 years

The Fair Credit Reporting Act (FCRA) sets a seven-year limit for most negative items to stay on your credit reports. Bankruptcy can impact your reports for up to ten years. Inquiries may remain on a credit report for up to two years. These are the maximum limits, but your creditors or the credit bureaus can choose to remove negative credit items earlier, if there is a reason to do so.

4. Employers cannot see your FICO score

A lot of people think that potential employers can look at your credit score during the hiring process. Some employers will ask to see your credit report, but it is a different version from the one you and your creditors use and is specifically to screen job candidates.

5. You have more than one FICO score

Each of the three credit bureaus uses its own version of the FICO score on its credit report. In addition, FICO has industry-specific scores, such as the FICO Auto Score for auto financing. And on top of that, there are several versions of each industry-specific score. So in all, you could have 28 different FICO scores!

If you have negative items on your credit reports, it can take time to improve your FICO score—but it is worth the investment of effort. For more information on how to improve your FICO Score and how to remove negative items from your credit reports, professional credit repair services can help. Sign up today to discuss your FICO score and learn about your options.