Several factors influence your credit (also called your FICO or Beacon) score.  The categories of these factors include payment history, amounts owed, length of credit history, new credit and types of credit used by the consumer.  The importance of each category can differ from consumer to consumer based upon your their credit worthiness. 

Payment history includes account payment information on specific types of accounts, including credit cards, retail accounts, installment loans, finance company accounts and mortgage accounts.  The presence of any adverse public records such as bankruptcy, judgments, liens, collections and delinquency for any of these any will result in derogatory payment history. 

The amounts owed category takes into consideration the amount a consumer owes on all of the consumer’s accounts.  This category considers the amount owed on specific accounts, lack of specific balance, number of accounts with balances, proportion of credit line used, and the proportion of installment loan amounts owed against original balance.  One way the amounts owed category can negatively affect a consumer’s credit is if the amount owed on a particular account is greater than 50% of the amount of credit extended to the consumer.  Stated another way, if you are using greater than 50% of your credit line on a given credit care, then this may adversely affect your credit score. 

The length of credit history category can also influence your credit score.  This category includes such factors as the time since your accounts were opened and time since activity.  This information indicates how long the consumer has had credit and how recent (or long ago) the consumer has used credit. 

The new credit category includes recently opened accounts and the proportion of accounts that have been recently opened.  Also, the number of recent credit inquiries, time since recent account opening, time since the consumer experienced a credit inquiry, and the re-establishment of positive credit history after the consumer experienced past payment problems. 

The last category, types of credit used, can also influence a consumer’s credit score.  The number of credit cards, retail accounts, installment loans, mortgage and consumer finance accounts are considered in this category. 

In total, the above categories can positively, or negatively, affect your credit score.  The information in your credit report will be used to calculate your FICO score.  Thus, the accuracy of your credit report is critical to ensure the highest possible FICO score.  If you have not already, learn how to request your free credit report here. 

Upon receipt, review credit reports from each of the credit reporting agencies (Equifax, Experian and Trans Union) and make sure each and every account listed on your reports is accurate and complete.  How do I get my credit report? 

As a consumer, you have rights under federal law (the Fair Credit Reporting Act).  If you have received your credit report and discovered inaccurate information, you may be entitled to money damages from the credit reporting agency(ies).  Contact one of our consumer credit attorneys for a free legal consultation.