Are you curious as to what your Fico Score is? FICO's scoring system has been revised many times since its inception in 1989. FICO's latest versions are released periodically by lenders. This allows them to decide whether to upgrade your FICO score. Below are some facts you should know about FICO scores.
Payment history
Your FICO score is determined by many factors, but the two most important ones are your credit utilization and payment history. Both of these factors are based on how much you owe compared to how much you have available. These factors also have to do with credit mix. It refers to how many types of loans and accounts 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 important to make on-time payments on all accounts, both current and previous. This is because FICO research has shown that the payment history is the best predictor of a person's ability to repay debt. A person's payment history includes collections accounts and bankruptcies. These can affect their credit scores.
Accounts owed
FICO scores can be calculated by analyzing credit reports. The FICO scores can be broken down by the amount of debt and the frequency with which payments have been made. It is important to know the history of payments as it reflects how well a person has paid off their debts. Accounts owed show how much money someone owes and whether they have made late or missed payments.
Fico scores as well as accounts owing are closely tied, since each one can affect another. However, a high balance does not necessarily mean that you're in trouble. A high percentage can indicate that you have too much debt. This can make it more difficult to pay your monthly bills.
Length of credit history
There are many factors to consider when determining your credit score. The better your credit history will be, the more you have it. 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.
Although the age of your accounts may have an effect on your score, it is not as important as other factors. You can have a low score with no history. However, the longer you have been in business, the higher the FICO score. Your age has an impact on how important other factors are in your score.
Credit mix
The best way to improve your Fico scores is to diversify your sources of credit. This is done by taking out loans of all types, including revolving. Combining installment and revolving credit is the best type of credit. Even if there is a small credit account, it will improve your FICO Score.
In addition to revolving and installment accounts, you should also open a credit card. This type revolving credit will increase your credit mix which is important for future loans applications. If your credit rating is still low, it's best to not apply for too much credit cards. Rejections could be detrimental to your fledgling credit score.
Credit new
Your new credit rating is the part of your credit file that contains information about any 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 affect your eligibility for credit cards and loans.
More than 80,000,000 consumers are expected to be affected by the new scoring model. Some consumers will see an increase in their score while others will see a decrease. People who are late on their payments will see a major impact from the changes. Personal loans are at greatest risk due to the lack of collateral.