FICO

 FICO® Score Factors Guide 

If your credit report comes with a credit score, it will include up to five factors that are affecting your score. These score factors explain the top reasons why your FICO® score was not higher. These same score factors are also included in the notice you might receive from a lender if your credit application is either declined or it is approved but the lender offers you less than the most favorable rate it offers its customers. It's important to take note of these factors so you have a better idea how you can improve your score in the future. However, if you already have a high FICO® score (usually in the mid-700's or higher), score factors may not be as helpful, since in this case they represent very marginal areas where you could improve your score.

The order in which the score factors are listed is important. The first factor indicates the area that most influenced your score, the second factor is the next most significant influence, and so on. In other words, concentrate on the first one or two score factors. The third and fourth are not as significant. Since 2011 federal law has required the reporting of a fifth factor when inquiries have affected the calculation of your score and inquiries were not reported as one of the first four factors.

These are some of the more common score factors and a brief explanation of each.

Reason Full Description
Amount owed on accounts is too high

Your FICO® Score considers how much you owe on your credit accounts, such as revolving credit accounts and non-mortgage installment loans. Generally, the more you owe on these accounts, the greater risk you pose to lenders.

What to do about this:

You should try to pay off your current debts and maintain low balances. However, consolidating or moving your debt from one account to another will usually not help your FICO® Score since the same total amount is owed.

Similar types of reasons:

Amount owed on mortgage loans is too high

Amount owed on delinquent accounts

The amount you owe on your past-due accounts is too high. Late payments are a very powerful predictor of future payment risk and the higher the balances on past-due accounts, the greater the risk.

What to do about this:

You should try to get caught up on these past-due amounts and continue to pay your bills on time.

Amount owed on revolving accounts is too high

Your FICO® Score evaluates how much you owe on your revolving accounts (such as your credit cards). The amount you owe on these accounts is too high.

What to do about this:

You should consider lowering the balances on your revolving accounts. However, consolidating or moving your debt from one account to another will usually not help your FICO® Score since the same total amount is owed.

Amount paid down on open mortgage loans is too low

Your FICO® Score considers how much you owe on your open mortgage loans relative to the original mortgage amount. Generally, the less you have paid down existing mortgage loans, the greater risk you pose to lenders.

Similar types of reasons:

Amount paid down on open installment loans is too low

Amount past due on accounts

Your FICO® Score was hurt because you have payments past due on your accounts. Generally, the greater amount that is past due, the greater the risk to lenders.

What to do about this:

You should try to get caught up on these past-due amounts and continue to pay your bills on time.

Derogatory public record or collection filed

The presence of a derogatory public record or collection is a powerful predictor of future payment risk. If the item is valid, satisfying the public record or paying off the collection will not remove the item from your credit report. The fact that it occurred is still predictive of future payment risk and will be considered by your FICO® Score. Most public records and collections stay on your report for no more than seven years—though bankruptcies may remain for up to 10 years.

Lack of recent revolving account information

Your credit report shows no open revolving accounts or it does not report recent information (such as balance or credit limit) about any of your revolving accounts. Your FICO® Score evaluates your mix of credit cards, installment loans, and mortgages. People who demonstrate responsible use of different types of credit are generally less risky to lenders.

What to do about this:

You might want to show new activity on any credit card. If you already have a credit card, you can do this by using it and paying it back on time. If you don't have a credit card, consider opening one. However, be aware that a new account opening, and to a lesser extent, the credit inquiry associated with applying for a new card may lower your FICO® Score in the short term.

Similar types of reasons:

  • Lack of recent auto loan information
  • Lack of recent bank/national revolving information
  • Lack of recent installment loan information
  • Lack of recent reported mortgage loan information
  • Lack of recent revolving HELOC information
Length of time accounts have been established

Your FICO® Score measures the length of one's credit history. In your case, the age of your oldest account or the average age of your accounts is relatively low, or both. People that do not frequently open new accounts and have longer credit histories generally pose less risk to lenders. Therefore, as your credit history lengthens and you pay your bills on time, this factor should have less of a negative impact on your score.

Length of time revolving accounts have been established

Your FICO® Score measures the length of your revolving account history. In your case, the age of your oldest revolving account or the average age of your revolving accounts is relatively low, or both. People who do not frequently open new accounts and have longer credit histories generally pose less risk to lenders. Therefore, as your credit history lengthens and you pay your bills on time, this factor should have less of a negative impact on your score.

Similar types of reasons:

  • Length of time bank/national revolving accounts have been established
  • Length of time consumer finance company loans have been established
  • Length of time installment loans have been established
  • Length of time open mortgage loans have been established
Level of delinquency on accounts

Your FICO® Score takes into account missed and late payments in a few ways. These include the number of late payments, how late they were and how recently they occurred. Your score was hurt because you have missed payments to your creditors.

What to do about this:

If you have late payments, get caught up on them and do your best to stay current. You should focus on continually paying all your bills on time. This will demonstrate a good payment history and these late payments will have less of an impact on your score as time passes.

No recent bank/national revolving balances

Your FICO® Score evaluates the types of credit currently in use, or that you have used in the past, and will consider the mix of retail cards, bankcards, and installment loans appearing on your credit bureau report. Consumers with very moderate usage of bankcard credit accounts (charging low balances and repaying them on time) are slightly better risks than those who do not use bankcard credit at all. In your case, moderate and responsible use of bankcard credit accounts can boost your score slightly.

What to do about this:

Demonstrating an ability to moderately and responsibly use bankcard credit accounts may boost your score slightly.

Similar types of reasons:

  • No recent non-mortgage balance information
  • No recent revolving balances
Number of accounts with delinquency

Your FICO® Score takes into account missed and late payments in a few ways. These include the number of late payments, how late they were and how recently they occurred. Your score was hurt because your credit report shows multiple accounts with missed payments or derogatory descriptions.

Keep in mind:

If the late payments on your credit report are valid, you should focus on continually paying all your bills on time. This will demonstrate a good payment history and these late payments will have less of a negative impact on your score as time passes.

Number of established accounts

Your FICO® Score also looks at the total number of accounts you have. Consumers with a moderate number of credit accounts appearing on their credit bureau report represent lower risk than consumers with either a relatively large number of credit accounts or a very limited number of credit accounts.

Keep in mind:

Closing an existing account doesn't make it disappear from your credit report immediately. So closing many or all of your accounts isn't likely to increase the score.

Similar types of reasons:

  • Number of bank/national revolving accounts
  • Number of bank/national revolving or other revolving accounts
  • Too many bank/national revolving accounts
  • Too many consumer finance company accounts
  • Too many mortgage loans with balances
Proportion (or ratio) of balances to credit limits on bank/national revolving or other revolving accounts is too high

Your FICO® Score evaluates the balances in relation to your available credit on revolving accounts. This is done looking at all of your revolving accounts, as well as looking at individual revolving accounts. In your case, this ratio of balances to credit limits is too high.

Keep in mind:

This credit usage ratio is one of the most important factors to your FICO® Score, so you should work on paying down your balances. Consolidating or moving your debt from one account to another will usually not help your FICO® Score.

Similar types of reasons:

  • Proportion of balances to credit limits on revolving HELOC is too high
  • Proportion of balances to loan amounts on auto accounts is too high
  • Proportion of balances to loan amounts on mortgage accounts is too high
  • Proportion of loan balances to loan amounts is too high
  • Proportion of revolving HELOC balances to total revolving balances is too high
Serious delinquency

The presence of a serious delinquency or a derogatory description is a powerful predictor of future payment risk – people with previous late payments are much more likely to pay late in the future. However as these items age and fall off of your credit report, their impact on your FICO® Score will gradually decrease. Most late payments stay on your report for no more than seven years.

Serious delinquency, and public record or collection filed

The presence of a derogatory public record or collection and a serious delinquency is a powerful predictor of future payment risk. If the item is valid, satisfying the public record or paying off the collection will not remove the item from your credit report. The fact that it occurred is still predictive of future payment risk and will be considered by your FICO® Score. However as these items age and fall off of your credit report, their impact on your score will gradually decrease. Most collections, public records and delinquencies stay on your report for no more than seven years – though bankruptcies may remain for up to 10 years.

Time since delinquency is too recent or unknown

Your FICO® Score takes into account missed and late payments in a few ways. These include the number of late payments, how late they were, and how recently they occurred. Your score was hurt because the time since your most recent past due payment or derogatory indicator was too recent.

What to do about this:

If the late payment on your credit report is valid, you should focus on continually paying all your bills on time. This will demonstrate a good payment history so that your last missed payment will have less of an impact on your score as time passes.

Time since derogatory public record or collection is too short

The presence of a derogatory public record or collection is a powerful predictor of future payment risk. If the item is valid, satisfying the public record or paying off the collection will not remove the item from your credit report. The fact that it occurred is still predictive of future payment risk and will be considered by your FICO® Score. However as this item ages and falls off of your credit report, its impact on your score will gradually decrease. Most public records and collections stay on your report for no more than seven years – though bankruptcies may remain for up to 10 years.

Time since recent account opening is too short

Your FICO® Score considers how recently you opened a new credit account. People who recently opened a new credit account are more likely to miss future payments than those who have not.

What to do about this:

Avoid opening more credit accounts at this time and as a general rule, if you don't need or plan to use credit, don't apply for it.

Too few accounts currently paid as agreed

Your FICO® Score considers the number of accounts where you are paying your bills as agreed – in your case this number is too low. This is because you have very few accounts or because you've missed payments recently on some of your accounts.

What to do about this:

If you don't have many accounts, you might consider opening a new credit card. However, opening a new account, and to a lesser extent, the resulting credit inquiry may lower your score in the short term. Opening a new credit card and managing your credit wisely will demonstrate that you can handle different types of credit.

Similar types of reasons:

  • Too few accounts with recent payment information
  • Too few active accounts
  • Too few bank/national revolving accounts
Too many accounts recently opened

Your FICO® Score was hurt because you recently opened too many new credit accounts. Opening several credit accounts in a short time period is reflective of greater risk – especially for people with short credit histories.

What to do about this:

Avoid opening more credit accounts at this time and as a general rule, if you don't need or plan to use credit, don't apply for it.

Similar types of reasons:

Too many recently opened installment accounts

Too many accounts with balances

Your FICO® Score considers the number of accounts you have with balances. For credit cards, even if you pay them off in full each month, your credit report may still show a balance on those cards. The total balance on your last statement is generally the amount that is shown on your credit report.

What to do about this:

Pay down the balances on your credit obligations. For revolving accounts, once they are paid down, keep your balances low.

Too many inquiries in last 12 months

Each time you apply for credit a credit inquiry is added to your credit report. People who are actively seeking credit pose more of a risk to lenders than those who are not. Your FICO® Score was lowered due to the number of credit inquiries within the last 12 months.

Typically, the presence of inquiries on your credit file has only a small impact on FICO® scores, carrying much less importance than late payments, the amount you owe, and the length of time you have used credit. This reason rarely appears as a primary or secondary reason except in high-scoring files. A common misperception is that every single inquiry will drop your score a certain number of points. This is not true.

Note that your FICO® Score usually identifies when you are rate shopping for a mortgage or auto loan and treats those multiple inquiries as a single inquiry.

Keep this in mind:

As a general rule, if you don't need or plan to use credit, don't apply for it.