Credit Rating Facts
What does and doesn’t go into credit scores
Many people know what a credit rating is, but the majority of people have never seen their own credit report. Some people may also be unclear on what exactly goes into a credit report. Listed below is information on what does and doesn’t go into a person’s FICO credit score.
What Goes into a Credit Rating
The data can be grouped into five categories. Each category has its own level of importance. For example, the payment history and amount of money owed are the most important. For people who don’t have much of a credit history, the importance of the categories may be somewhat different. Each credit report is unique and the importance of the information varies from person to person.
Length of Credit History includes the time since accounts have been opened, the specific type of accounts, and the time since account activity.
New Credit includes the number of recently opened accounts, the type of accounts, the number of recent credit inquiries, the time since recent account openings, the time since credit inquiries, and the re-establishment of a positive credit history following past payment difficulties.
Payment History is information on credit cards, retail accounts, loans, mortgages and other debts. It also includes public records such as bankruptcy, judgments, suits, liens and wage attachments. This category of information also includes late payments, how late the payments were, the amount past due on delinquent accounts, how long ago this occurred, adverse public records if any, collection items if any, number of past due items on file, and the number of accounts that were paid off successfully.
Types of Credit Used includes information on the various types of accounts you have, such as credit cards, mortgages, retail accounts, installment loans and consumer finance accounts.
Amounts Owed includes the amount of money owing on all accounts, the amount owing on specific types of accounts, number of accounts with balances, the percentage of amount owing compared to amount of credit available, and the percentage still owing on installment loans compared to the original loan.
What Doesn’t Go into a Credit Rating
Under the Consumer Credit Protection Act, U.S. law prohibits certain information to be used when calculating your credit score. This includes your race, color, religion, national origin, sex and marital status.
Money lenders may take into consideration your salary, occupation and employment history, but it’s not included in a FICO rating.
The score also doesn’t consider:
- If you are receiving any type of credit counseling
- Any interest rate being charged on a particular credit card or account
- Any items reported as child / family support obligations or rental agreements
- Consumer initiated inquiries
- Promotional inquiries
- Administrative inquiries
- Employer inquiries
- Where you live
- Any information not found in your credit report
- Any information that isn’t proven to be predictive of future credit performance
