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| SMOKY MOUNTAIN FINANCE 3219 E. Lamar Alexander Suite #2 MARYVILLE, TN 37804 877.676.6599 888.676.6599 FAX 865.441.2373 AFTER HOURS |
What’s In Your Score as taken from:
FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as
outlined below. The percentages in the chart reflect how important each of the categories is in determining your score.
These percentages are based on the importance of the five categories for the general population. For particular groups - for
example, people who have not been using credit long - the importance of these categories may be somewhat different.
Payment History
Amounts Owed
Length of Credit History
New Credit
Types of Credit Used
Please note that:
report changes, so does the importance of any factor in determining your score. Thus, it's impossible to say exactly how
important any single factor is in determining your score - even the levels of importance shown here are for the general
population, and will be different for different credit profiles. What's important is the mix of information, which varies from
person to person, and for any one person over time.
requesting.
What is Not In Your Score
FICO® scores consider a wide range of information on your credit report. However, they do not consider:
Other types of scores may consider your age, but FICO scores don't.
Lenders may consider this information, however, as may other types of scores.
The score does not count “consumer-initiated” inquiries – requests you have made for your credit report, in order to check it. It also
does 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.
Improving Your FICO® Score
It’s important to note that raising your score is a bit like losing weight: It takes time and there is no quick fix. In fact, quick-fix efforts
can backfire. The best advice is to manage credit responsibly over time.
Payment History Tips
get better over time.
Amounts Owed Tips
Length of Credit History Tips
information. Also, rapid account buildup can look risky if you are a new credit user.
New Credit Tips
consumers.
Types of Credit Use Tips
who has managed credit cards responsibly.
Facts & Fallacies
Fallacy: My score determines whether or not I get credit.
Fact: Lenders use a number of facts to make credit decisions, including your FICO score. Lenders look at information such as the
amount of debt you can reasonably handle given your income, your employment history, and your credit history. Based on their
perception of this information, as well as their specific underwriting policies, lenders may extend credit to you although your score is
low, or decline your request for credit although your score is high.
Fallacy: A poor score will haunt me forever.
Fact: Just the opposite is true. A score is a “snapshot” of your risk at a particular point in time. It changes as new information is
added to your bank and credit bureau files. Scores change gradually as you change the way you handle credit. For example, past
credit problems impact your score less as time passes. Lenders request a current score when you submit a credit application, so
they have the most recent information available. Therefore by taking the time to improve your score, you can qualify for more
favorable interest rates.
Fallacy: Credit scoring is unfair to minorities.
Fact: Scoring considers only credit-related information. Factors like gender, race, nationality and marital status are not included. In
fact, the Equal Credit Opportunity Act (ECOA) prohibits lenders from considering this type of information when issuing credit.
Independent research has been done to make sure that credit scoring is not unfair to minorities or people with little credit history.
Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history. In other
words, at a given score, non-minority and minority applicants are equally likely to pay as agreed.
Fallacy: Credit scoring infringes on my privacy.
Fact: Credit scoring evaluates the same information lenders already look at - the credit bureau report, credit application and/or
your bank file. A score is simply a numeric summary of that information. Lenders using scoring sometimes ask for less information -
fewer questions on the application form, for example.
Fallacy: My score will drop if I apply for new credit.
Fact: If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for
your credit report information (called “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 or mortgage lenders within a short period of time. Typically, these
are treated as a single inquiry and will have little impact on the credit score.
Average Credit Statistics
As a company that helps the nation's largest banks and financial institutions assess credit risk, Fair Isaac is often asked to describe
the credit use of a typical consumer. In researching the answer, we discovered that consumers vary immensely in what types of
credit they use and how they use it.
By analyzing a representative national sample of millions of consumer credit profiles, Fair Isaac was able to survey the panorama of
credit activity across the U.S. The following statistics reflect the average use of credit by today's consumers.
Number of Credit Obligations
On average, today's consumer has a total of 13 credit obligations on record at a credit bureau. These include credit cards (such as
department store charge cards, gas cards, or bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.).
Not included are savings and checking accounts (typically not reported to a credit bureau). Of these 13 credit obligations, 9 are
likely to be credit cards and 4 are likely to be installment loans.
Past Payment Performance
On average, today's consumers are paying their bills on time. Less than half of all consumers have ever been reported as 30 or
more days late on a payment. Only 3 out of 10 have ever been 60 or more days overdue on any credit obligation. 77% of all
consumers have never had a loan or account that was 90+ days overdue, and less than 20% have ever had a loan or account
closed by the lender due to default.
Credit Utilization
About 40% of credit card holders carry a balance of less than $1,000. About 15% are far less conservative in their use of credit
cards and have total card balances in excess of $10,000. When we look at the total of all credit obligations combined (except
mortgage loans), 48% of consumers carry less than $5,000 of debt. This includes all credit cards, lines of credit, and loans-
everything but mortgages. Nearly 37% carry more than $10,000 of non-mortgage-related debt as reported to the credit bureaus.
Total Available Credit
The typical consumer has access to approximately $19,000 on all credit cards combined. More than half of all people with credit
cards are using less than 30% of their total credit card limit. Just over 1 in 7 are using 80% or more of their credit card limit.
Length of Credit History
The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time. In fact,
we found that 1 out of 4 consumers had credit histories of 20 years or longer. Only 1 in 20 consumers had credit histories shorter
than 2 years.
Inquiries
When someone applies for a loan or a new credit card account - in short, any time one applies for credit and a lender requests a
copy of the credit report - this request is noted as an “inquiry” in the applicant's credit file. The average consumer has had only one
inquiry on his or her accounts within the past year. Fewer than 6% had four or more inquiries resulting from a search for new credit.
Credit Inquiries
To learn about credit inquiries and how they may or may not affect your FICO® score, choose a topic below.
What is a credit inquiry?
A credit inquiry is an item on a credit report that shows a business with a "permissible purpose" (as defined under the federal Fair
Credit Reporting Act) has previously requested a copy of the report.
Not all inquiries count toward your FICO score.
When you check your credit report, you may notice that a number of credit inquiries have been made, sometimes from businesses
that you don’t know. But the only inquiries that count toward your FICO score are the ones that result from your applications for new
credit.
credit report. These types of inquiries, prompted by your own actions, appear on your credit report and are included in
your FICO score.
account do not count toward your FICO score. Credit checks by prospective employers also do not count. These types
of inquiries may appear on your credit report, but they are not included in your FICO score.
Your FICO score is not affected when you check your credit.
Checking your credit reports regularly to be sure they are accurate and error-free is a good idea. In fact, maintaining accurate
credit reports is a part of good credit management, which can help to improve your FICO scores over time.
You can order more than one of your credit reports with FICO scores right here at myFICO.com. Checking your score at myFICO
does not count as an inquiry and will not hurt your FICO score.
How inquiries are factored into FICO scores.
There are five types of information used to calculate a FICO score at any given point in time. Each type of information counts as a
percentage of a total FICO score:
Payment history = 35%
Amounts owed = 30%
Length of credit history = 15%
New credit = 10%
Types of credit in use = 10%
These percentages are based on the importance of the five categories for the general population. For particular groups, such as
people with relatively short credit histories, the importance of the categories may differ.
Inquiries are a subset of the "new credit" category shown above, which accounts for 10% of the total FICO score. Their importance
depends on the overall information in your credit report. For some people, a given factor may be more important than for someone
else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor
in determining your score. What's important is the mix of information, which varies from person to person, and for any one person
over time.
Inquiries may or may not affect your FICO score.
A FICO score takes into account only voluntary inquiries that result from your application for credit. The information about inquiries
that can be factored into your FICO score includes:
A FICO score does not take into account any involuntary inquiries made by businesses with whom you did not apply for credit,
inquiries from employers, or your own requests to see your credit report.
For many people, one additional credit inquiry (voluntary and initiated by an application for credit) may not affect their FICO score
at all. For others, one additional inquiry would take less than 5 points off their FICO score.
Inquiries can have a greater impact, however, if you have few accounts or a short credit history. Large numbers of inquiries also
mean greater risk: People with six inquiries or more on their credit reports are eight times more likely to declare bankruptcy than
people with no inquiries on their reports.
What happens when you apply for credit.
When you apply for credit, you authorize the lender to ask for a copy of your credit report. This is how voluntary inquiries appear on
your credit report.
The inquiries section of your credit report contains a list of everyone who accessed your credit report within the last two years. The
report you see lists both voluntary inquiries, spurred by your own requests for credit, and involuntary inquiries, such as when
lenders order your credit report to offer you a pre-approved credit card.
Will my FICO score drop if I apply for new credit?
If it does, it probably won't drop much. 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 or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on
the credit score.
What to know about "rate shopping."
Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though you’re only looking
for one loan. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry.
In addition, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30
days, the inquiries won't affect your score while you're rate shopping.
Improving your FICO score.
If you need a loan, do your rate shopping within a focused period of time, 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 inquiries occur.
Generally, people with high FICO scores consistently:
Also, here are some good credit management practices that can help to raise your FICO score over time.
consumers, such as myFICO®, your own inquiries will not affect your FICO score.
FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as
outlined below. The percentages in the chart reflect how important each of the categories is in determining your score.
These percentages are based on the importance of the five categories for the general population. For particular groups - for
example, people who have not been using credit long - the importance of these categories may be somewhat different.
Payment History
- Account payment information on specific types of accounts (credit cards,
- Presence of adverse public records (bankruptcy, judgments, suits, liens, wage
- Severity of delinquency (how long past due)
- Amount past due on delinquent accounts or collection items
- Time since (recentness of) past due items (delinquency), adverse public records (if any), or collection items (if any)
- Number of past due items on file
- Number of accounts paid as agreed
Amounts Owed
- 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
Length of Credit History
- Time since accounts opened
- Time since accounts opened, by specific type of account
- Time since account activity
New 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,
Please note that:
- A score takes into consideration all these categories of information, not just one or two.
- The importance of any factor depends on the overall information in your credit report. For some people, a given factor
report changes, so does the importance of any factor in determining your score. Thus, it's impossible to say exactly how
important any single factor is in determining your score - even the levels of importance shown here are for the general
population, and will be different for different credit profiles. What's important is the mix of information, which varies from
person to person, and for any one person over time.
- Your FICO score only looks at information in your credit report. However, lenders look at many things when making a
requesting.
- Your score considers both positive and negative information in your credit report. Late payments will lower your score,
What is Not In Your Score
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
- 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 or rental agreements.
- Certain types of inquiries (requests for your credit report).
The score does not count “consumer-initiated” inquiries – requests you have made for your credit report, in order to check it. It also
does 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.
Improving Your FICO® Score
It’s important to note that raising your score is a bit like losing weight: It takes time and there is no quick fix. In fact, quick-fix efforts
can backfire. The best advice is to manage credit responsibly over time.
Payment History Tips
- Pay your bills on time. - Delinquent payments and collections can have a major negative impact on your score.
- If you have missed payments, get current and stay current. - The longer you pay your bills on time, the better your
- Be aware that paying off a collection account will not remove it from your credit report. It will stay on you
- If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.
get better over time.
Amounts Owed Tips
- Keep balances low on credit cards and other “revolving credit”. - High outstanding debt can affect a score.
- Pay off debt rather than moving it around. - The most effective way to improve your score in this area is by paying
- Don't close unused credit cards as a short-term strategy to raise your score.
- Don't open a number of new credit cards that you don't need, just to increase your available credit. This approach
Length of Credit History Tips
- If you have been managing credit for a short time, don't open a lot of new accounts too rapidly. New accounts will lower
information. Also, rapid account buildup can look risky if you are a new credit user.
New Credit Tips
- Do your rate shopping for a given loan within a focused period of time. - FICO® scores distinguish between a search
- Re-establish your credit history if you have had problems. - Opening new accounts responsibly and paying them off on
- Note that it's OK to request and check your own credit report. - This won't affect your score, as long as you order your
consumers.
Types of Credit Use Tips
- Apply for and open new credit accounts only as needed. - Don't open accounts just to have a better credit mix - it
- Have credit cards - but manage them responsibly. In general, having credit cards and installment loans (and paying
who has managed credit cards responsibly.
- Note that closing an account doesn't make it go away. A closed account will still show up on your credit report, and
- may be considered by the score.
Facts & Fallacies
Fallacy: My score determines whether or not I get credit.
Fact: Lenders use a number of facts to make credit decisions, including your FICO score. Lenders look at information such as the
amount of debt you can reasonably handle given your income, your employment history, and your credit history. Based on their
perception of this information, as well as their specific underwriting policies, lenders may extend credit to you although your score is
low, or decline your request for credit although your score is high.
Fallacy: A poor score will haunt me forever.
Fact: Just the opposite is true. A score is a “snapshot” of your risk at a particular point in time. It changes as new information is
added to your bank and credit bureau files. Scores change gradually as you change the way you handle credit. For example, past
credit problems impact your score less as time passes. Lenders request a current score when you submit a credit application, so
they have the most recent information available. Therefore by taking the time to improve your score, you can qualify for more
favorable interest rates.
Fallacy: Credit scoring is unfair to minorities.
Fact: Scoring considers only credit-related information. Factors like gender, race, nationality and marital status are not included. In
fact, the Equal Credit Opportunity Act (ECOA) prohibits lenders from considering this type of information when issuing credit.
Independent research has been done to make sure that credit scoring is not unfair to minorities or people with little credit history.
Scoring has proven to be an accurate and consistent measure of repayment for all people who have some credit history. In other
words, at a given score, non-minority and minority applicants are equally likely to pay as agreed.
Fallacy: Credit scoring infringes on my privacy.
Fact: Credit scoring evaluates the same information lenders already look at - the credit bureau report, credit application and/or
your bank file. A score is simply a numeric summary of that information. Lenders using scoring sometimes ask for less information -
fewer questions on the application form, for example.
Fallacy: My score will drop if I apply for new credit.
Fact: If it does, it probably won't drop much. If you apply for several credit cards within a short period of time, multiple requests for
your credit report information (called “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 or mortgage lenders within a short period of time. Typically, these
are treated as a single inquiry and will have little impact on the credit score.
Average Credit Statistics
As a company that helps the nation's largest banks and financial institutions assess credit risk, Fair Isaac is often asked to describe
the credit use of a typical consumer. In researching the answer, we discovered that consumers vary immensely in what types of
credit they use and how they use it.
By analyzing a representative national sample of millions of consumer credit profiles, Fair Isaac was able to survey the panorama of
credit activity across the U.S. The following statistics reflect the average use of credit by today's consumers.
Number of Credit Obligations
On average, today's consumer has a total of 13 credit obligations on record at a credit bureau. These include credit cards (such as
department store charge cards, gas cards, or bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.).
Not included are savings and checking accounts (typically not reported to a credit bureau). Of these 13 credit obligations, 9 are
likely to be credit cards and 4 are likely to be installment loans.
Past Payment Performance
On average, today's consumers are paying their bills on time. Less than half of all consumers have ever been reported as 30 or
more days late on a payment. Only 3 out of 10 have ever been 60 or more days overdue on any credit obligation. 77% of all
consumers have never had a loan or account that was 90+ days overdue, and less than 20% have ever had a loan or account
closed by the lender due to default.
Credit Utilization
About 40% of credit card holders carry a balance of less than $1,000. About 15% are far less conservative in their use of credit
cards and have total card balances in excess of $10,000. When we look at the total of all credit obligations combined (except
mortgage loans), 48% of consumers carry less than $5,000 of debt. This includes all credit cards, lines of credit, and loans-
everything but mortgages. Nearly 37% carry more than $10,000 of non-mortgage-related debt as reported to the credit bureaus.
Total Available Credit
The typical consumer has access to approximately $19,000 on all credit cards combined. More than half of all people with credit
cards are using less than 30% of their total credit card limit. Just over 1 in 7 are using 80% or more of their credit card limit.
Length of Credit History
The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time. In fact,
we found that 1 out of 4 consumers had credit histories of 20 years or longer. Only 1 in 20 consumers had credit histories shorter
than 2 years.
Inquiries
When someone applies for a loan or a new credit card account - in short, any time one applies for credit and a lender requests a
copy of the credit report - this request is noted as an “inquiry” in the applicant's credit file. The average consumer has had only one
inquiry on his or her accounts within the past year. Fewer than 6% had four or more inquiries resulting from a search for new credit.
Credit Inquiries
To learn about credit inquiries and how they may or may not affect your FICO® score, choose a topic below.
What is a credit inquiry?
A credit inquiry is an item on a credit report that shows a business with a "permissible purpose" (as defined under the federal Fair
Credit Reporting Act) has previously requested a copy of the report.
Not all inquiries count toward your FICO score.
When you check your credit report, you may notice that a number of credit inquiries have been made, sometimes from businesses
that you don’t know. But the only inquiries that count toward your FICO score are the ones that result from your applications for new
credit.
- Inquiries that count toward your FICO score. There is only one type of credit inquiry that counts toward your FICO
credit report. These types of inquiries, prompted by your own actions, appear on your credit report and are included in
your FICO score.
- Inquiries that don’t count toward your FICO score. Your own credit report requests, credit checks made by
account do not count toward your FICO score. Credit checks by prospective employers also do not count. These types
of inquiries may appear on your credit report, but they are not included in your FICO score.
Your FICO score is not affected when you check your credit.
Checking your credit reports regularly to be sure they are accurate and error-free is a good idea. In fact, maintaining accurate
credit reports is a part of good credit management, which can help to improve your FICO scores over time.
You can order more than one of your credit reports with FICO scores right here at myFICO.com. Checking your score at myFICO
does not count as an inquiry and will not hurt your FICO score.
How inquiries are factored into FICO scores.
There are five types of information used to calculate a FICO score at any given point in time. Each type of information counts as a
percentage of a total FICO score:
Payment history = 35%
Amounts owed = 30%
Length of credit history = 15%
New credit = 10%
Types of credit in use = 10%
These percentages are based on the importance of the five categories for the general population. For particular groups, such as
people with relatively short credit histories, the importance of the categories may differ.
Inquiries are a subset of the "new credit" category shown above, which accounts for 10% of the total FICO score. Their importance
depends on the overall information in your credit report. For some people, a given factor may be more important than for someone
else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor
in determining your score. What's important is the mix of information, which varies from person to person, and for any one person
over time.
Inquiries may or may not affect your FICO score.
A FICO score takes into account only voluntary inquiries that result from your application for credit. The information about inquiries
that can be factored into your FICO score includes:
- 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(ies).
A FICO score does not take into account any involuntary inquiries made by businesses with whom you did not apply for credit,
inquiries from employers, or your own requests to see your credit report.
For many people, one additional credit inquiry (voluntary and initiated by an application for credit) may not affect their FICO score
at all. For others, one additional inquiry would take less than 5 points off their FICO score.
Inquiries can have a greater impact, however, if you have few accounts or a short credit history. Large numbers of inquiries also
mean greater risk: People with six inquiries or more on their credit reports are eight times more likely to declare bankruptcy than
people with no inquiries on their reports.
What happens when you apply for credit.
When you apply for credit, you authorize the lender to ask for a copy of your credit report. This is how voluntary inquiries appear on
your credit report.
The inquiries section of your credit report contains a list of everyone who accessed your credit report within the last two years. The
report you see lists both voluntary inquiries, spurred by your own requests for credit, and involuntary inquiries, such as when
lenders order your credit report to offer you a pre-approved credit card.
Will my FICO score drop if I apply for new credit?
If it does, it probably won't drop much. 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 or mortgage lenders within a short period of time. Typically, these are treated as a single inquiry and will have little impact on
the credit score.
What to know about "rate shopping."
Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though you’re only looking
for one loan. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry.
In addition, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30
days, the inquiries won't affect your score while you're rate shopping.
Improving your FICO score.
If you need a loan, do your rate shopping within a focused period of time, 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 inquiries occur.
Generally, people with high FICO scores consistently:
- Pay bills on time.
- Keep balances low on credit cards and other revolving credit products.
- Apply for and open new credit accounts only as needed.
Also, here are some good credit management practices that can help to raise your FICO score over time.
- Re-establish your credit history if you have had problems. Opening new accounts responsibly and paying them on time
- Check your own credit reports regularly, and before applying for new credit, to be sure they are accurate and
consumers, such as myFICO®, your own inquiries will not affect your FICO score.
