When is the last time you checked your credit score? Have you ever checked your credit score? This article will give a brief overview of what information creates the basis for your credit score using Fair Isaac Corporation (FICO) Score as well as different types of credit accounts and inquiries.

FICO Scores are generated from three credit bureaus – Experian, TransUnion, and Equifax. It is important to remember that each is an independent agency and could have some variation from one to the next. FICO Scores have different versions so it depends on which version and credit bureau agency a lender uses as to what information and score will report.  Also note, credit scoring is constantly changing and could be different from each credit reporting agency even it’s requested at the same time.  Base FICO Scores range from 300-850 and industry specific FICO Scores range from 250-900 with higher being better and considered lower risk for a lender.

How is a FICO Score calculated? FICO Scores use five different pieces of credit data in your credit report.

  1. Payment history: This is a report of whether you’ve paid past credit accounts and if you have paid on time. Past due status will only be listed in 30-day increments of 30, 60, 90, and 120 days. It also takes into consideration the presence of adverse public records, including bankruptcy, judgments, suits, liens, etc.

  2. Amounts owed: Amount of credit owed and credit utilization ratio (balance divided by limit) is the next important. It is recommended to only use 20-30% of your available credit limit to maintain a healthy credit utilization ratio on revolving accounts.

  3. Length of credit history: Length of credit history is the number of years you have used credit accounts and what accounts are currently being used.

  4. New credit: New credit is opening a new credit account. Avoid too much new credit at the same time and, if possible, have an assortment of credit to demonstrate you can handle a variety of credit responsibly.

  5. Credit mix: Deals with the mix of types of credit on your report.

Some items that do not affect your credit score are age, income, employment status, bank balances, marital status, and debit or prepaid cards.


Will your FICO Score drop if applying for new credit? If applying for new credit it may change, but it probably won’t drop much. If you apply for several items of the same credit within a short period of time (2 weeks to 45 days), those are typically treated as a single inquiry with little impact.  There are also hard and soft inquiries. Hard inquiries are applications for new credit. They will stay on your report for two years but only factor into your score for 12 months. Soft inquiries are completed if a creditor pulls your report to send you a pre-approval offer of credit or if a potential employer pulls a credit report. If you pull your own credit report, it also counts as a soft inquiry.  Soft inquiries never damage your score.

How long do items remain on your credit report? With a few exceptions, negative information can generally stay on your report for seven years. Positive information can remain indefinitely. On the other hand, not all creditors supply information to reporting agencies so you may request to add the information to future reports.

How can you get your credit report? Go to www.annualcreditreport.com and download a free copy from each of the 3 credit bureaus or call 1-877-322-8228 to request. One free copy from each bureau is available every 12 months. If you believe something is inaccurate, you may dispute the item(s) with the credit bureaus to attempt to have it removed. Submit a dispute letter and any documentation or proof the information is inaccurate. Information regarding this process is included in the credit report. Remember to dispute with each credit bureau where the inaccuracy is reported since they are independent agencies and do not communicate or share information. Keep all records of disputes.

How can you increase your score? First, there is no quick way to fix a credit score. The best advice is to manage credit responsibly over time. You cannot magically have longer credit history but you can control making your payments and making them on time. If you missed payments in the past, older credit problems count for less so it will not haunt you forever. Beware of using too much of your credit amount and keep that credit utilization ratio in check. Do not add too much new credit at once or open accounts you don’t need to increase available credit. Pay off collection accounts if possible, but remember they can stay on your report for up to seven years. Request the credit bureaus to update to paid status and keep all documentation of paid items after paying a collection. Raising your scores or building credit for the first time will take patience and dedication. Seeking assistance doesn’t hurt your FICO score either.

Still want to know more? CEFCU has partnered with GreenPath Financial Wellness to offer financial education tools and counseling services. Check out more information regarding credit at https://www.greenpath.com/category/financial-education-articles/credit-articles/.

And, visit https://www.myfico.com/ for more credit score resources.

*Note: This blog article was written by a CEFCU employee and it is for informational purposes only.