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myFICO credit report display

Want to learn what's really going on in your credit report and FICO® score? In 2007, myFICO introduced a new report display used in all myFICO products that makes understanding your credit reports and FICO scores easier than ever. Take a peek at this webinar where we discussed the key elements of your FICO score and credit report – and more importantly, how to interpret them. After we covered the report display, we answered questions from the audience – these are listed below.

Conducted on:

September 20, 2007

Number of attendees:

210

Duration:

30 minutes

Average attendee rating:

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Questions answered in this webinar:

What's a good FICO score?

It's really going to depend on the lender. They are going to individually determine what an acceptable risk level is for them. As a general guideline, the best thing to check are the rate tables for different mortgage and auto loans on the myFICO home page that have rates by score band that lenders tend to generally follow. And when working with a lender, definitely ask them which score they will be looking at and what the cutoff is for them to be considered a good score.

How often does my FICO score change?

The score is re-calculated every time it is requested. So if one lender requests your score at 10 AM your score is calculated and if another lender requests it at 11 AM it's calculated again. It’s not calculated periodically and stored somewhere. Every time you obtain a FICO score online the score is calculated at that exact moment and that particular score will remain the same. Logging back in and viewing that report again will not change any of the information on it. However, if you buy another report everything is pulled fresh and the score is re-calculated.

How often should you expect your score to change? About every 30 days your lenders report to the bureaus, as a general guideline. In a 3-month period only about one in four people has a 20 point change in their FICO score. If you aren't making significant changes to your credit situation, it isn't likely to change often.

Does myFICO provide the actual FICO scores that lenders use?

Yes. These are the same FICO scores your mortgage lender, auto lender, bank or credit union are going to get.

Does checking your credit report hurt your FICO score?

No it doesn't. That would be classified as a soft inquiry which means you are pulling it on your own behalf and that has absolutely no affect on your FICO score.

How long does a credit inquiry stay on your credit report?

Two years. But the FICO score will only consider it for the first year.

Are multiple inquiries in a brief period treated as a single inquiry?

Yes, but only for mortgage and auto loan inquiries. There are two stages to the treatment of an inquiry associated with mortgage and auto loans. First, there's a 30-day buffer period. For the first 30 days that an inquiry is on your credit report it will be ignored by the FICO score. Then, once it passes that 30-day window, inquiries are grouped so that all inquiries within a rolling 14-day period are considered as just one inquiry by the FICO score.

Can closing a credit card hurt your FICO score?

In some cases it can have a negative affect; but not always. An important thing to consider is how this will affect the ratio of total balances/total credit. For example, if you have 4 credit cards with a total balance of $5,000 and a total credit limit of $25,000 your ratio is 20%. If you close a card with no balance and a $5,000 credit limit, then your new ratio is 25% ($5,000 over $20,000 in remaining credit limits). The larger that change the more likely it is to hurt you.

Does applying for new credit affect your FICO score?

It could. First, the most common but the least affect, is in the New Credit portion of the score, because an inquiry will occur. Second, when you first open the account it will have a very short credit history. That could affect the average length of credit history across all your accounts as you're averaging in a very low number of months in with the rest of your credit cards which have longer histories. The more accounts you have the less this will matter.

Does everyone have a FICO score?

There are 3 pieces of information required to meet the minimum criteria for having a FICO score. Keep in mind the score is predicting to a lender the likelihood you will repay debt, so there needs to be some data to work off of.

1. One account on your report that's at least 6 months old.
2. One account that has been updated (reported to the credit bureau) within the last 6 months.
3. You cannot be reported as being deceased.

What is "mix of credit"?

This is 10% of your FICO score, and it looks at the different types of debt you have. The more of a mix you are able to successfully manage (for example a mortgage, an auto loan and several credit cards) the better, because it shows you are able to handle a variety of different debts and keep them under control at one time.

Other questions:

How reliable & accurate are the estimates that come out of the FICO Score Simulator?

The FICO Score Simulator is intended to provide an estimated range of scores where yours might lie after taking certain actions. It's not meant to be specific or the only tool you should rely on before making a serious financial decision, such as paying off a large loan amount.

Why does a hard inquiry hurt your score?

There are a few important considerations to keep in mind about inquiries:

1. All hard inquiries do not impact one's score, as sometimes a single inquiry can impact it and sometimes you can have three or four that don't.
2. When a hard inquiry impacts your score, the effect is usually only a few points.
3. While inquiries remain on your report for two years, the scoring formula only considers them for the first year.

To answer your question, inquiries are taken into consideration by the FICO scoring formula because research has shown that consumers who have recently taken on new credit obligations are more likely to be late on future payments than those who haven't. And inquiries are the earliest indicators that new credit is being sought out.

Can I remove an old/closed credit account from my report?

By law, the credit bureaus are required to remove most forms of negative credit information after seven years. There are variations on this amount of time, such as for bankruptcies and some tax liens, and some States have different requirements. Closed accounts without any negative payment history typically remain on the report for 10 years after closing, while open accounts in good standing can remain on the report indefinitely. For more information on these rules, particularly with regard to negative information, it's a good idea to contact the credit bureaus.

When disputing an item and the results are verified, why does this change the credit score?

Disputing an item will only occasionally affect one's FICO score. For most disputes, there is no effect on the score – either positive or negative. For some disputes, however, the information in dispute is flagged by the credit bureau and ignored by the scoring formula while under investigation. In such cases a dispute could cause a score to change, as you may have a late payment under investigation not affecting the score while in dispute, thus causing the score to be higher than it would be if that late item was being considered. Then if the late payment is later verified by the lender as accurate and remains on the credit report, the score could drop when the investigation is completed and the item is no longer flagged as being in dispute. But, again, this type of example is the exception rather than the rule.

I heard the three credit agencies are merging into one, and therefore you will only have one score. Is this true?

While the credit bureaus aren't merging into one, they have joined forces to develop a new credit score called VantageScore. This score is currently offered by all three bureaus – Equifax, TransUnion and Experian.

In regard to collections, is it true that if you pay off an old collection that the score will drop significantly – even if the last active or open date is even 5 years ago?

No. This is not true, although it has become somewhat of an urban legend. If the collection is being reported and updated accurately by the collection agency and the credit bureau, paying off a collection should have no effect on the FICO score.

I heard that the FICO score changed recently. Can you tell me more about that?

A new version of the FICO score has been developed that incorporates a number of changes, including a change in the way "authorized user" accounts are treated. This particular change means that, whereas currently an account in which you are an authorized user is scored no differently than your individually and jointly held accounts, the new formula will exclude authorized user accounts from your score. This new FICO scoring model is called FICO 08 and is expected to be in use by late Fall 2007. The scoring range of this new FICO model will continue to be 300-850®.