What is a Credit Score?

A credit score is a number generated by a mathematical formula that is meant to predict credit worthiness. The most common of the credit score standards is the FICO score by Fair Isaac. The FICO score ranges from 350-850 and is intended as a predictor of whether or not you will be 90 days late on a loan obligation. Fair Isaac uses thousands of credit reports to calibrate the FICO scoring model and is very secretive of the exact formula.

• 35% - Payment History
• 30% - Debt Ratio & Utilization
• 15% - Account Age
• 10% - Account Mix
• 10% - Inquiries

Credit Score Categories

Payment History: 35% — The largest credit score category covers your payment history for the past 7-10 years. Each of your credit card and loan payments is reported each month and kept archived on your credit report. Negative items such as collection accounts, bankruptcies, judgments, tax liens, and other public records are all included in this category of your credit score. Lesson: Always pay your bills on time.

Debt Utilization: 30% — The next biggest credit score category is also the most commonly misunderstood. This section evaluates how much of your credit card limits you are currently using. Appearing "maxed out" can damage your score significantly. Only use between one and ten percent of your total credit card limits each month for the maximum score points in this score category. Lesson: Keep your debt balances low.

Account Age: 15% — The amount of time you've been using credit counts for the next fifteen percent of your score. Keeping your credit and loan accounts open for seven or more years can help you earn the most points in this category. And be sure to actively use your existing accounts to keep fresh data coming into your credit reports. Lesson: Don't close old accounts.

Account Mix: 10% — You'll earn a few extra credit score points by having a mix of loan and credit accounts on your credit report. Having a credit card, mortgage, student loan, and auto loan all at the same time will earn you all of the points for this small category. Of course, this isn't always realistic. Don't worry if you don't have each of the account types; this category only makes up ten percent of your score.Lesson: Account diversity is good thing.

Inquiries: 10% — Your recent record of applying for new credit and loan accounts makes up the final ten percent of your credit score. Only hard inquiries — when your credit is checked for a loan, credit card, utility, or bank account application — are included in this category. Soft inquiries from checking your own credit or credit card pre-approval don't impact your score. Lesson: Apply for credit in moderation.

According to the Government Accountability Office, 80-90% of credit reports have serious errors on them, and this does not even include the more minute errors that iCreditConnection looks for. If we cannot remove at least 25% of the negative credit items from all three of your credit reports, we will refund 100% of your fee.


How can I find out my credit score?

Visit www.myfico.com and order the same credit score a mortgage company uses for approvals. Requests for one’s own FICO score at www.myfico.com is considered a personal inquiry and will not hurt the credit score. iCreditConnection cannot pull your credit score for you.

How can I get a free copy of my credit report?

By law, all consumers are entitled to a free copy of their credit report from each of the three credit bureaus once a year. Visit www.annualcreditreport.com to get yours for FREE. (This is for the credit report only and does not include the credit score.)

How long will the items get reported on my file?

• Delinquencies (30–180 days): Can remain seven years from the date of the initial missed payment.

• Collection accounts: Remain seven years from the date of the initial missed payment that led to the collection (the original delinquency date). When a collection account is paid in full, it will be marked "paid collection" on the credit report.

• Charged-off accounts: Remain seven years from the date of the initial missed payment that led to the charge-off (the original delinquency date), even if payments are later made on the charged-off account.

• Closed accounts: Closed accounts are accounts that are no longer available for further use. Closed accounts may or may not have a zero balance. Closed accounts with delinquencies remain seven years from the date they are reported closed, whether closed by the creditor or by the consumer, but the delinquency notation will be removed seven years after the delinquency occurred when pertaining to late payments. Positive closed accounts remain ten years from the closing date.

• Lost credit card: If there are no delinquencies, credit cards that are reported lost will continue to be listed for two years from the date the card is reported lost. Delinquent payments that occurred before the card was lost are reported for seven years.

• Bankruptcy: Chapters 7, 11, and 12 remain for ten years from the filing date. Chapter 13 remains seven years from the filing date. Accounts included in bankruptcy will remain seven years from the date they were reported as included in the bankruptcy.

• Judgments: Remain seven years from the date the judgment is filed.

• City, county, state, and federal tax liens: Unpaid tax liens remain fifteen years from the filing date. Paid tax liens remain seven years from the paid date of the lien.

• Inquiries: Most inquiries listed on your credit report will remain for two years. All inquiries must remain for a minimum of one year from the date the inquiry was made. Some inquiries, such as employment or pre-approved offers of credit, will show only on a personal credit report pulled by you.

Is there anything that cannot be in my credit report?

Certain information cannot be in a credit report, including:

• Medical information (unless you give your consent)
• Notice of bankruptcy (Chapter 11) that is more than ten years old
• Debts (including delinquent child support payments) that are more than seven years old
• Age, marital status, or race (if the request is from a current or prospective employer
  
  

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