Part 2 - The Components Of Your Score Understanding Your Credit Report

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By Mia Bolaris-Forget

FICO scores are determined via viewing various components of your credit report. The concluding data can be broken down into five distinct categories as outlined below:

Payment History:

· Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)

· Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)

· Severity of delinquency (how long past due)

· Amount past due on delinquent accounts or collection items

· Recency of past due items, adverse public records (if any), or collection items (if any)

· Number of past due items on file

· Number of accounts paid as agreed

Outstanding Obligations:

· Amount owing on accounts

· Amount owing on specific types of accounts

· Lack of a specific type of balance, in some cases

· Number of accounts with balances

· Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)

· Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans

Extent Of Credit History:

· Time since accounts opened

· Time since accounts opened, by specific type of account

· Time since account activity

Additional Credit:

· Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account

· Number of recent credit inquiries

· Time since recent account opening(s), by type of account

· Time since credit inquiry(s)

· Re-establishment of positive credit history following past payment problems

Types of Credit Used:

· Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)

In addition to noting what your score is comprised of it’s also important to remember the following:

· Your score is al-inclusive. It takes into account all the aforementioned factors (not just one or two. And, no single piece of information alone determines your score.

· The relevance of any factor is based on the overall picture. For some, one factor may be more important than others. Different credit histories require examination of different areas of information. Again, as your credit report changes, so does the importance of each and every determining factor affecting your score. What is most important is the combination of information that tends to vary from person to person and from circumstance to circumstance over time.

· While your FICO report is a thorough scrutinization of your credit report, lenders often examine other areas before making a determination. These may include your income, how long you’ve been employed at your current job and the kind of credit you are requesting.

· Your score evaluates both the positive and negative aspects of your history. Late payments will lower your score, but establishing or re-establishing a healthy record will help raise your score.

Continue To Part 3 - "Factored Out" >>