Complete Credit Score Guide

What is a Credit Score?

A credit score tells lenders about your creditworthiness (how likely you are to pay back a loan based on your credit history). It is calculated using the information in your credit reports. FICO® Scores are the standard for credit scores—used by 90% of top lenders.

Credit scores influence the credit that’s available to a person and the terms (interest rate, etc.) that lenders may offer. It’s a vital part of credit health.

When you apply for credit — whether for a credit card, an auto loan or a mortgage—lenders want to know what risk they’d take by loaning money. When lenders order a credit report, they can also request a credit score that’s based on the information in the report. A credit score helps lenders evaluate a credit report. It is a number that summarizes credit risk, based on a snapshot of a credit report at a particular point in time.

It’s important to understand that not every credit score offered for sale online is a FICO Score. 

About FICO Scores

The most widely used credit scores are FICO Scores, the credit scores created by Fair Isaac Corporation . 90% of top lenders use FICO Scores to help them make billions of credit-related decisions every year. FICO Scores are calculated based only on information in a consumer’s credit report maintained by the credit bureaus, Experian, Equifax and TransUnion.
By comparing this information to the patterns in hundreds of thousands of past credit reports, FICO Scores estimate your level of future credit risk, or how likely you are to repay a loan on time.

What is a good credit score?

Most credit scores have a 300-850 score range. The higher the score, the lower the risk to lenders. A “good” credit score is considered to be in the 670-739 score range.

While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders may use to determine your actual interest rates.

Why is my credit score high or low?

When a credit score is calculated, the credit bureau will also provide up to five reasons that are most heavily influencing that particular score. Here is what makes up your credit score.

What’s in my FICO® Scores?

FICO Scores are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).

Your FICO Scores consider both positive and negative information in your credit report. The percentages in the chart reflect how important each of the categories is in determining how your FICO Scores are calculated. The importance of these categories may vary from one person to another—we’ll cover that in the next section.

The importance of credit categories varies by person

Your FICO Scores are unique, just like you. They are calculated based on the five categories referenced above, but for some people, the importance of these categories can be different. For example, scores for people who have not been using credit long will be calculated differently than those with a longer credit history.

In addition, as the information in your credit report changes, so does the evaluation of these factors in determining your FICO Scores.

Your credit report and FICO Scores evolve frequently. Because of this, it’s not possible to measure the exact impact of a single factor in how your FICO Score is calculated without looking at your entire report. Even the levels of importance shown in the FICO Scores chart above are for the general population and may be different for different credit profiles.

Your FICO Scores only look at information in your credit report

Your FICO Score is calculated only from the information in your credit report. However, lenders may look at many things when making a credit decision, such as your income, how long you have worked at your current job, and the kind of credit you are requesting.

What’s not in my FICO® Scores?

FICO® Scores consider a wide range of information on your credit report. However, they do not consider:

• Your race, color, religion, national origin, sex and marital status.
  US law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.
• Your age.
  Other types of scores may consider your age, but FICO Scores don’t.
• Your salary, occupation, title, employer, date employed or employment history.
  Lenders may consider this information, however, as may other types of scores.
• Where you live.
• Any interest rate being charged on a particular credit card or other account.
• Any items reported as child/family support obligations.
• Certain types of inquiries (requests for your credit report).
  Your scores do not count “consumer-initiated” inquiries – requests you have made for your credit report, in order to check it. They also do not count “promotional inquiries” – requests made by lenders in order to make you a “pre-approved” credit offer – or “administrative inquiries” – requests made by lenders to review your account with them. Requests that are marked as coming from employers are not counted either.
• Any information not found in your credit report.
• Any information that is not proven to be predictive of future credit performance.
• Whether or not you are participating in a credit counseling of any kind.

What’s in your credit report?

What categories are considered when calculating my FICO Score?

Payment history (35%)

The first thing any lender wants to know is whether you’ve paid past credit accounts on time. This helps a lender figure out the amount of risk it will take on when extending credit. This is the most important factor in a FICO Score.

What is Payment History?

Payment history shows how you’ve paid your accounts over the length of your credit. This evidence of repayment is the primary reason why payment history makes up 35% of your score and is a major factor in its calculation. Research shows that your track record of payment tends to be the strongest predictor of the likelihood that you’ll pay all debts as agreed to. And as you can imagine, a lender’s number one priority is your past record of paying back (or not) your loans.

A few late payments are not an automatic “score-killer.” An overall good credit history can outweigh one or two instances of late credit card payments.

However, having no late payments in your credit report doesn’t mean you’ll get a “perfect score.” Your payment history is just one piece of information used in calculating your FICO Scores.

Types of accounts considered for credit payment history

Account types considered for credit history could include:

• Credit cards (Visa, MasterCard, American Express, Discover, etc.)
• Retail accounts (credit from stores where you shop, like department store credit cards)
• Installment loans (loans where you make regular payments, like car loans)
• Finance company accounts
• Mortgage loans

Public record and collection items

These types of events are considered quite serious, although older items and items with small amounts will count less than recent items or those with larger amounts.

Negative factors include:

• Bankruptcies- will stay on your credit report for 7-10 years, depending on the type
• Lawsuits
• Wage attachments

7 components that make up your payment history:

• Payment information on credit cards, retail accounts, installment loans, mortgages and other types of accounts
• How overdue delinquent payments are today or may have become in the past
• The amount of money still owed on delinquent accounts or collection items
• The number of past due items on a credit report
  Adverse public records (e.g., bankruptcies)
• The amount of time that’s passed since delinquencies, adverse public records or collection items were introduced
• The number of accounts that are being paid as agreed

Tips to enhance your payment history.

The tips below might sound a little obvious but reading them might help give you that push to make that first move. Payment history can be improved upon, but there’s only one person who can do that… You. Here’s how:

• Pay bills on time. Sounds simple, and easier said than done, but it’s the best way to start getting your payment history back on track. Set up a budget to ensure you have the money necessary to pay your bills on time. It might mean some sacrifices, but better to give up a few things now than to ruin your credit for a lifetime.
• Get/stay current on missed payments. The older a credit problem, the less it counts toward your credit score. So the longer you pay your bills on time, even after having late payments, the more potential for your FICO Scores to increase.
• Contact creditors/get help. Contact your creditors to see if they can help you in any way, like lowering your interest rate so you can pay off your debt faster. You can also meet with a credit counseling service who might be able to assist you with properly budgeting your money and consolidating your debts — all potentially help you improve your credit history.

Payment history is the biggest score factor, so it’s important to pay close attention to it and make sure your bills are paid on time. Read next about amount of debt and how that factors into your FICO Scores too.

Amounts owed (30%)

Having credit accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low FICO Score. However, if you are using a lot of your available credit, this may indicate that you are overextended—and banks can interpret this to mean that you are at a higher risk of defaulting.

What is Amounts Owed?

In a very general sense, Amounts owed refers to how much debt you carry in total. However, the amount of debt you have is not as significant to your credit score as your credit utilization. When a high percentage of a person’s available credit has been used, this can indicate that a person is overextended, and is more likely to make late or missed payments.

Amounts owed on accounts determines 30% of a FICO® Score

FICO research has found that your level of debt is predictive of future credit performance because the amount owed typically impacts your ability to pay all monthly credit obligations on time. Not to worry if you have debt — it doesn’t automatically make you a high-risk borrower. However, as your balances increase so does the probability of difficulty meeting monthly payments on time, but that’s just part of what determines your credit score.

Part of the science of scoring is determining how much is too much for a given credit profile. Your FICO Scores take into account several factors.

There are 5 factors that the Amounts Owed Category looks at:

The amount owed on all accounts

Note that even if you pay off your credit cards in full each month, your credit report may show a balance on those cards. The total balance on your last statement is generally the amount that will show in your credit report.

The amount owed on different types of accounts

In addition to the overall amount you owe, your FICO Scores consider the amount you owe on specific types of accounts, such as credit cards vs. installment loans.

How many accounts have balances?

A larger number of accounts with amounts owed can indicate higher risk of over-extension.

Credit utilization ratio on revolving accounts

Your credit utilization ratio on revolving accounts-the percentage of your available credit you’re using-is an important factor in your FICO Scores. Using a high percentage of your available credit means you’re close to maxing out your credit cards, which can have a negative impact on your FICO Scores.

On the other hand, using a low percentage of your available credit can have a positive impact. In some cases, a low credit utilization ratio will have a more positive impact on your FICO Scores than not using any of your available credit at all.

It’s also important to note that your current account balance isn’t necessarily the balance that shows up on your credit report. Your account balance on your credit report will reflect the account balance your lender reported to the credit bureau (typically the balance from your latest monthly statement). So even if you pay your credit card balances in full each month, your account balance won’t necessarily show on your credit report as $0.

How much of the installment loan amounts is still owed, compared with the original loan amount?

For example, if you borrowed $10,000 to buy a car and you have paid back $2,000, you still owe (with interest) more than 80% of the original loan. Paying down installment loans is a good sign that you’re able and willing to manage and repay debt.

The amounts of debt that you owe is an important part of your credit and makes up 30% of your FICO Score. Keep track of your debt and credit utilization.

Length of credit history (15%)

In general, having a longer credit history is positive for your FICO Scores, but is not required for a good credit score.

Your FICO Scores take into account:

• How long your credit accounts have been established, including the age of your oldest account, the age of your newest account and an average age of all your accounts

• How long specific credit accounts have been established?
• How long it has been since you used certain accounts

What is the Length of Your Credit History?

Like fine wine, whiskey and cheese, most credit histories only get better with age. Although the length of your credit history only accounts for 15% of your FICO® Score, it’s still an important influence on lenders. It can definitely impact the chances of whether or not you get a loan.

Even some people who haven’t had credit for a considerable length of time can still have a high FICO Score if the rest of their credit report looks good. A longer credit history will always have a positive effect on FICO Scores.

When it comes to length of credit history, your FICO Scores take three things into account:

1. How long your credit accounts have been open including the age of your oldest account, the age of your newest account, and an average age of all your accounts.
2. How long specific credit accounts have been open?
3. How long it has been since the account has been used.

You can find all three items on your credit report.

How to establish your credit history

The big catch-22 of growing your FICO Score is that you need credit to get credit, and it’s difficult to open lines of credit to build your FICO Score if you don’t have a good FICO Score. Fear not. You can absolutely do some things to help grow the length of your credit history. Here are a few to get you started.

First, apply for a secured credit card. A secured card is a card where you provide cash collateral for the line of credit. FICO Scores look at secured cards the same as any credit card. Most banks and lending institutions not only offer secured cards, but most also report secured card activity to the credit bureaus.

Second, see if you can get a friend or family member with good credit to be a co-applicant with you – this will help you establish your credit history. Or see if they are willing to authorize you on their card. It’s a lot to ask, but if they’re willing, it’s a good way to start growing your credit history.

Finally, adopt a mindset where you see the length of your credit history as part of your greater long-term credit strategy. Use your card but keep the balances low and pay on time. If you do, you’ll find yourself well on the road to building a strong credit history that you can put to work when you need credit.

Consider whether or not to keep accounts open

You may be tempted to shut down that credit card that you just paid off after years of making payments. Before you do, take a moment to consider what impact closing that account may have on your length of credit history.

Next you should read about credit mix and how that factor’s into your FICO Score.

Credit mix (10%)

FICO Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. Don’t worry, it’s not necessary to have one of each.

What Does Credit Mix Mean?

The types of credit you have are known as your credit mix. They can include a mix of accounts from credit cards, retail accounts, installment loans, finance company and mortgage loans.

Credit mix determines 10% of a FICO® Score

So, what does it mean to you and your FICO Score? Creditors assess the risk of lending money through a variety of factors, one of them being your ability to successfully manage different types of credit. FICO not only looks at the mix of credit you have but also at the payment history of these credit types. For instance, if you have a great mix of installment and revolving loans, yet your payment history is bad, your FICO Score will reflect that negative payment history, which represents 35% of your FICO Score.

For creditors, it stands to reason that the better you manage different loans and lines of credit, the lower their risk when lending you money.

Again, since credit mix is only 10% of your FICO Score, it most likely won’t determine whether or not you obtain credit from lenders. However, if you’re striving to bring your FICO Score to the highest level it can be, your credit mix can play a part.

Figuring out your credit mix

Okay, so a good credit mix can help your credit score. Does that mean you should start applying for all the types of credit lines you don’t currently have? No.

First and foremost, two things happen when you apply for multiple new credit lines within a short period of time:

1. Creditors check your credit (a “hard inquiry”) which typically lowers your credit score and remains on your credit report for two years. (Note: FICO Scores only consider inquiries made during the 12 months prior to the time the Score is calculated.)
2. If a creditor sees you’ve opened an inordinate number of new accounts within a small time frame, it could indicate to them that you’re experiencing financial distress, whether true or not. The result? A likely denial of the loan.

Therefore, if you want to add something to your credit mix that’s currently missing, balance the risk versus the reward. Is it worth a drop in your score to apply for a small loan to show creditors you can manage payments successfully? With credit mix being such a small percentage of your credit score, the answer is, “probably not.” However, in the end, the final decision is yours.

Types of credit accounts

Do you have experience with both revolving credit and installment type accounts, or has your credit experience been limited to only one type?

Revolving accounts

Revolving accounts are those that provide you with credit that allows more flexibility regarding the amount paid monthly (subject to any minimum payments required, and payment due dates, etc.). Some of these include:

• Credit Cards
• Retail Store Cards
• Gas Station Cards
• HELOC (Home Equity Line of Credit)

Installment accounts

These types of accounts usually require a fixed payment each month until the balance is paid down in full. A few examples of these are:

• Mortgage
• Auto Loan
• Student Loan

Now that you know more about credit mix, check out the last FICO Score factor, new credit. See how New Credit Will Affect Your Credit Score.

What is New Credit?

New credit makes up 10% of a FICO® Score. When you apply for new credit, inquiries remain on your credit report for two years. FICO Scores only consider inquiries from the last 12 months.

People tend to have more credit today and shop for new credit more frequently than ever. FICO Scores reflect this reality. However, research shows that opening several new credit accounts in a short period of time represents greater risk – especially for people who don’t have a long credit history. Your FICO Scores consider several factors when looking at new credit.

Here are the 3 things to look at for the new credit factor:

How many new accounts you have?

Your FICO Scores look at how many new accounts you have by type of account. They may also look at how many of your accounts are new accounts.

Don’t open new accounts too rapidly.

If you’ve been managing credit for a short time, don’t open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your FICO Scores if you don’t have a lot of other credit information. Even if you have used credit for a long time, opening a new account can still lower your FICO Scores.

How many recent inquiries you have?

An inquiry is when a lender makes a request for your credit report or score. Although FICO Scores only consider inquiries from the last 12 months, inquiries remain on your credit report for two years. FICO Scores have been carefully designed to count only those inquiries that truly impact credit risk, as not all inquiries are related to credit risk.

There are 3 important facts about inquiries to note:

• Inquiries usually have a small impact
• Many types of inquiries are ignored completely
• The score allows for “rate shopping”

Remember: It’s OK to request and check your own credit report.

Checking your credit report won’t affect your FICO Scores, if you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

Credit Checks: What are credit inquiries and how do they affect your FICO® Score?

When you apply for credit, you authorize those lenders to ask or “inquire” for a copy of your credit report from a credit bureau. When you later check your credit report, you may notice that their credit inquiries are listed. The only inquiries that count toward your FICO Scores are the ones that result from your applications for new credit.

It’s important to know that there are 2 types of credit inquiries. Soft inquiries such as viewing your own credit report will not affect your FICO Score. Hard inquiries such as actively applying for a new credit card or mortgage will affect your score. Read below to see how much hard inquiries can affect your FICO Score.

More examples of hard inquiries:

• You go car shopping and apply for financing at the car dealership, and they pull a credit report on you.
• You get a preapproved credit card offer in the mail and respond to the offer.
• You contact your credit card company and request a credit line increase. The company pulls a fresh credit report on you to help determine if they will grant the line increase.

More examples of soft inquiries:

• Your bank gets an updated FICO Score on all its customers to check the credit quality of its customer base.
• You got a new job and your employer pulled your credit report as part of its new employee screening process.

Do credit inquiries affect my FICO Score?

FICO’s research shows that opening several credit accounts in a short period of time represents greater credit risk. When the information on your credit report indicates that you have been applying for multiple new credit lines in a short period of time (as opposed to rate shopping for a single loan, which is handled differently as discussed below), your FICO Scores can be lower as a result. Although FICO Scores only consider inquiries from the last 12 months, inquiries remain on your credit report for two years.

If you apply for several credit cards within a short period of time, multiple inquiries will appear on your report. Looking for new credit can equate with higher risk, but most Credit Scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on your credit scores.

How much will credit inquiries affect my score?

The impact from applying for credit will vary from person to person based on their unique credit histories. In general, credit inquiries have a small impact on your FICO Scores. For most people, one additional credit inquiry will take less than five points off their FICO Scores.

For perspective, the full range for FICO Scores is 300-850. Inquiries can have a greater impact if you have few accounts or a short credit history. Large numbers of inquiries also mean greater risk. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. While inquiries often can play a part in assessing risk, they play a minor part and are only 10% of what makes up a FICO score. Much more important factors for your scores are how timely you pay your bills and your overall debt burden as indicated on your credit report.

What to know about rate shopping?

Research has indicated that FICO Scores are more predictive when they treat loans that commonly involve rate-shopping, such as mortgage, auto and student loans, in a different way. For these types of loans, FICO Scores ignore inquiries made in the 30 days prior to scoring. So, if you find a loan within 30 days, the inquiries won’t affect your scores while your rate shopping.

In addition, FICO Scores look on your credit report for rate-shopping inquiries older than 30 days. If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry. For FICO Scores calculated from older versions of the scoring formula, this shopping period is any 14-day span. For FICO Scores calculated from the newest versions of the scoring formula, this shopping period is any 45-day span. Each lender chooses which version of the FICO score formula it wants the credit reporting agency to use to calculate your FICO Scores.

What to remember when you are rate shopping

If you need a loan, do your rate shopping within a focused period such as 30 days. FICO Scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which the inquiries occur.

When you look for new credit, only apply for and open new credit accounts as needed. And before you apply, it’s good practice to review your credit report and FICO Scores to know where you stand. Viewing our own information will not affect your FICO Scores.

As a general rule, it is OK to apply for credit when needed. Be mindful of this information so you can start the credit-seeking process with more confidence.

How long it’s been since you opened a new account.

This is the age of your most recently opened account. Your FICO Scores may consider the time that has passed since you opened a new credit account, for specific types of accounts.

How new credit can lower FICO Scores

When applying for new credit, an inquiry is placed on your credit report. That means, for instance, if you’re trying to get a new credit card, the lender will “inquire” into your credit report from one of the three major credit agencies. Depending on the other factors in your report, this inquiry can lower your score by a few points.

A new credit card or line of credit will also affect your length of credit history. This part of your score is made up of your “oldest” account and the average of all your accounts. Opening new credit lowers the average age of your total accounts. This, in effect, lowers your length of credit history and subsequently, your credit score.

New credit, once used, will increase the “amounts owed” factor of your credit score. Amounts owed is composed of credit utilization — the ratio of your credit balances to your credit limits. Very often, the lower your credit utilization (how much credit you’re using compared to your total credit limit), the higher your credit score. When you open and use a new credit card or line of credit, you’re getting closer to your credit limit, which could mean a lower score.

How new credit can increase FICO Scores

If the new line of credit helps diversify the types of accounts you currently have, this can increase the “credit mix” factor of your credit score. It shows lenders you can obtain and manage different kinds of credit, which can lower their risk of lending you money.

Let’s say you open a new credit card account (which could initially lower your score) and then don’t use that card for any new purchases. Over time, this can lower your credit utilization which could mean an increase in your credit score.

If you have a bad “payment history” and are starting from scratch to create a positive one, then opening new credit can help with that. If you can prove to lenders that you can pay your bills on time, this will help increase your score in the long run.

You should carefully consider if you need a new credit account. In the next section, you can learn about how to improve your credit scores.

How to repair your credit and improve your FICO® Scores

You can improve your FICO Scores by first fixing errors in your credit history (if errors exist) and then following these guidelines to maintain a consistent and good credit history. Repairing bad credit or building credit for the first time takes patience and discipline. There is no quick way to fix a credit score. In fact, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast.

The best advice for rebuilding credit is to manage it responsibly over time. If you haven’t done that, then you’ll need to repair your credit history before you see your credit score improve. The following steps will help you with that.

Steps to improve your FICO Score

Check your credit report for errors

Carefully review your credit report from all three credit reporting agencies for any incorrect information. Dispute inaccurate or missing information by contacting the credit reporting agency and your lender. Read more about disputing errors on your credit report in the next section.

Remember: checking your own credit report or FICO Score has no impact on your credit score.

Pay bills on time

Making payments on time to your lenders and creditors is one of the biggest contributing factors to your credit scores—making up 35% of a FICO Score calculation. Past problems like missed or late payments are not easily fixed.

• Pay your bills on time: delinquent payments, even if only a few days late, and collections can have a significantly negative impact on your FICO Scores. Use payment reminders through your banks’ online portals if they offer the option. Consider enrolling in automatic payments through your credit card and loan providers to have payments automatically debited from your bank account.
• If you have missed payments, get current and stay current: poor credit performance won’t haunt you forever. The longer you pay your bills on time after being late, the more your FICO Scores should increase. The impact of past credit problems on your FICO Scores fades as time passes and as recent good payment patterns show up on your credit report.
• Be aware that paying off a collection account will not remove it from your credit report: it will stay on your report for seven years.
• If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor: this won’t rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. Seeking assistance from a credit counseling service will not hurt your FICO Scores.

Reduce the amount of debt you owe

Your credit utilization, or the balance of your debt to available credit, contributes 30% to a FICO Score’s calculation. It can be easier to clean up than payment history, but it requires financial discipline and understanding the tips below.

• Keep balances low on credit cards and other revolving credit: high outstanding debt can negatively affect a credit score.
• Pay off debt rather than moving it around: the most effective way to improve your credit scores in this area is by paying down your revolving (credit card) debt. In fact, owing the same amount but having fewer open accounts may lower your scores. Come up with a payment plan that puts most of your payment budget towards the highest interest cards first, while maintaining minimum payments on your other accounts.
• Don’t close unused credit cards as a short-term strategy to raise your scores.
• Don’t open several new credit cards you don’t need to increase your available credit: this approach could backfire and actually lower your credit scores.

How to fix errors on your credit reports and how they occur

To err may be human, but if that human error negatively affects your credit worthiness, you’re not alone. The number one complaint received by the Consumer Financial Protection Bureau (CFPB) involved incorrect information listed on consumers’ credit reports. Of those complaints, errors on a credit report were at the top of the list.

Worse yet, 26% of the participants in the study conducted by the Federal Trade Commission (FTC), identified at least one error on their credit report that could make them appear riskier to lenders. The potential negative impacts those errors can have on your credit report can be catastrophic on your ability to get loans, new lines of credits, or better lending terms and interest rates.

That’s why staying on top of the content of your credit reports is so important. In this section, we’ll reveal some of the most common mistakes found in credit reports, how to fix them, and what to do if you disagree with any of the information in your report.

Common mistakes that cause credit report errors

To begin, it’s important to know if the person responsible for the error is you. Often, a person may have applied for credit under different names (Robert Jones and Bob Jones, or Dan, Danny, or Daniel Smith, etc.). Make sure you’re consistent and always use the same first name and middle initial, otherwise your report may actually contain information about another person with a similar name. Likewise, apply the same consistency and care with things like your Social Security number and address.

Or it could be a case of what you didn’t put in your report. If you were denied credit because of an “insufficient credit file” or “no credit file,” it may be because your credit file doesn’t reflect all your credit accounts. Though most national department store and all-purpose bank credit card accounts will be included in your file, not all creditors voluntarily supply information to the credit bureaus, nor are they required to report consumer credit information to credit bureaus.

If you find missing accounts, ask your creditors to begin reporting your credit information to credit bureaus, or consider moving your account to a different creditor who does report regularly to credit bureaus.

Other common errors to look for:

• Someone else made a clerical error in reading or entering your name or address information from a hand-written application.
• Similarly, loan or credit card payments may have been inadvertently applied to the wrong account.
• Errors may have lenders seeing double because
• accounts have been reported more than once, making it appear you have more open lines of credit or higher debt than you actually do.
• If you closed a credit account, make sure that your report does reflect that it was “closed by grantor” making it appear that the creditor closed the account, and not you.
• If you’re divorced, make sure that your former spouse’s debts are not reflected on your report.
• Likewise, make sure that older bad debts that should have been removed from your credit report have been, because credit-reporting companies should remove them from your report after seven years.
• Finally, mysterious accounts and bad debts could be the work of identity thieves who have gotten ahold of your personal information.

Fixing credit report errors

To ensure mistakes are corrected as quickly as possible, contact both the credit bureau and organization that provided the information to the bureau. Both these parties are responsible for correcting inaccurate or incomplete information in your report under the Fair Credit Reporting Act.

Keep in mind that all three of the credit bureaus now accept the filing of disputes online, with Experian now only accepting online submissions.

Find out how to initiate a dispute.

How do I correct errors on my credit reports?

To correct errors on your credit report, you need to contact the credit bureau that is showing erroneous information. Your FICO® Score uses the information on your credit reports to calculate your FICO Score, so inaccurate or incorrect information on your credit report can hurt your score.

myFICO customers can use the following contact information to reach each bureau:

Equifax

Equifax Disputes

All disputes with Equifax are handled online.

Experian

Experian Disputes

All disputes with Experian are handled online.

TransUnion
1-800-916-8800
TransUnion Disputes
2 Baldwin Place, P.O. BOX 1000
Chester, PA 19022

TransUnion Disputes

Your File Identification Number (FIN) is no longer needed by TU’s system. TU’s automated system may ask you for a FIN, but it is not needed to move the call forward and speak to a live agent.

Here are your rights regarding information on your credit report

The Fair Credit Reporting Act  is designed to help ensure that credit bureaus furnish correct and complete information to businesses to use when evaluating your application.

Your rights under the Fair Credit Reporting Act:

• You have the right to receive a copy of your credit report. The copy of your report must contain all of the information in your file at the time of your request.
• You have the right to know the name of anyone who received your credit report in the last year for most purposes or in the last two years for employment purposes.
• Any company that denies your application must supply the name and address of the credit bureau they contacted, provided the denial was based on information given by the credit bureau.
• You have the right to a free copy of your credit report when your application is denied because of information supplied by the credit bureau. Your request must be made within 60 days of receiving your denial notice.
• If you contest the completeness or accuracy of information in your report, you should file a dispute with the credit bureau and with the company that furnished the information to the bureau. Both the credit bureau and the furnisher of information are legally obligated to investigate your dispute.
• You have a right to add a summary explanation to your credit report if your dispute is not resolved to your satisfaction.

Begin by telling the credit bureau what information you believe is inaccurate. Credit bureaus must investigate the item(s) in question-usually within 30 days-unless they consider your dispute frivolous. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your communication should:

• Clearly identify each disputed item in your report.
• State the facts and explain why you dispute the information.
• Request deletion or correction.

You may also want to enclose a copy of your report with the items in question circled. Your communication may look something like this:

Sample Letter of Explanation to Dispute Credit Report

NOTE

All 3 of the credit bureaus now accept filing of disputes online, with Experian only accepting online submissions. Tell the credit bureau in writing what information you believe is inaccurate. Include copies (NOT originals) of documents that support your position.

You may want to enclose a copy of your credit report with the items in question circled. Send your letter by certified mail, return receipt requested, so you can document that the credit bureau received your correspondence. Keep copies of your dispute letter and enclosures.

Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Credit Bureau
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,

Your name

Enclosures: (List what you are enclosing)

     If mailing a letter, send it by certified mail, return receipt requested, so you can document that the credit bureau did, in fact, receive your correspondence. Also, keep copies of your dispute letter and enclosures. 

Next, write to the appropriate creditor or other information provider, explaining that you are disputing the information provided to the bureau. Again, include copies of documents that support your position. Many providers specify an address for disputes.

If the provider again reports the same information to a bureau, it must include a notice of your dispute. Request that the provider copy you on correspondence they send to the bureau. Expect this process to take between 30 and 90 days.

In many states, you will be eligible to receive a free credit report directly from the credit bureau, once a dispute has been registered, to verify the updated information. Contact the appropriate credit bureau to see if you qualify for this service.

How will accepted disputes affect your FICO Score?

Often your score will improve when errors on your credit report are corrected. In some situations, however, your score may not improve when credit information is corrected or updated. For example:

• It is often thought that closing credit card accounts will improve your score. This is not true. Closing an account will neither remove it from your credit report, nor will it prevent the payment history from continuing to be displayed and considered in the calculation of your FICO Score.
• Removing negative information from your credit report may not have the impact on your FICO Score that you expect. There could be additional negative information remaining that will prevent an immediate increase in your FICO Score.
• FICO Scores only consider credit-related information on your credit report. If you change personal information (address, SSN, employer, date of birth, etc.), the credit information on your report will not be impacted and your FICO Score will probably not change. The FICO Score only considers credit account, collection, and public record information.

It typically takes the credit bureau 30-45 days to respond to your dispute.

What if you disagree with the credit bureau’s investigation?

Credit bureau investigations are not always resolved in your favor. If that’s the case, ask the credit bureau to include your statement of the dispute in your file and in future reports. If requested, the credit bureau will also provide your statement to anyone who received a copy of the old report in the recent past. Though there is usually a fee for this service, it’s probably worth the cost.

If you tell the information provider that you dispute an item, a notice of your dispute must be included anytime the information provider reports the item to a credit bureau while that dispute is being investigated.

Finally, if the investigation does not produce the results you feel are correct, and inaccurate information in your credit report is causing you harm, you may consider hiring a lawyer to help resolve your dispute as a last resort.

The secret to success is to be vigilant and tenacious when it comes to reviewing, repairing, and correcting the record regarding your credit reports.

The minimum required to calculate a credit score

For a credit score to be calculated, your credit report must contain enough information—and enough recent information—on which to base a credit score.
Generally, that means you must have at least one account that has been open for six months or longer, and at least one account that has been reported to the credit bureau within the last six months. 

What are the minimum requirements for a FICO® Score?

In order to receive a valid FICO Score, the credit report must have:

• At least one account opened for six months or more, and
• At least one account that has been reported to the credit bureau within the past six months, and
• No indication of deceased on the credit report (Please note, if you share an account with another person this may affect you if the other account holder is reported deceased).

The minimum scoring criteria may be satisfied by a single account or by multiple accounts on a credit file. In certain rare cases, whether a given credit report qualifies for a FICO Score may vary across different FICO Score versions.

Different scores at each credit bureau

Because each credit bureau could have different information on file about you, your credit scores will most likely differ for each of the three credit bureaus: Equifax, TransUnion and Experian.

Sometimes the difference is just a few points. Other times, the difference in your credit scores from each bureau can be vast due to an error or mistake in your credit report. These differences can cost you thousands over the life of a loan. Be sure to check your reports regularly or sign up for alerts to be notified when your score changes.

Your credit scores will change over time

As the information in your credit report changes, so will any new credit score based on your credit report. Your credit scores from a month ago are probably not the same score a lender would get from the credit bureau today. 

Other credit scores or FICO Scores?

While FICO Scores are used by 90% of top lenders, there are other credit scores made available to consumers. Other credit scores may evaluate your credit report differently than FICO Scores. When purchasing a credit score for yourself, most experts recommend getting a FICO Score, as FICO Scores are used in 90% of lending decisions.