When checking your application for a credit card or a loan, most lenders will assess your creditworthiness, or your likelihood of paying back what you borrow, by looking at your 3-digit credit score.
While there are various scoring models lenders choose from, most use the FICO credit scoring model by Fair Isaac Corp. to measure consumers' risk. FICO scores range from 300 to 850, or from very poor credit to excellent credit.
Wherever your credit score falls, it's worth noting what can make your score go up or down. But you also should understand what doesn't get considered into your score's calculation at all.
Below, CNBC Select liststhe 12 factors FICO ignores when calculating your credit score.
It's reassuring to know that your age and your salary won't determine whether you have agood or bad credit score, but you should still know what lenders will see when they evaluate your risk.
These factors include your payment history, your outstanding balances (or your credit utilization rate), your length of credit history, how frequently you apply for new credit and the variety of credit products that you have, such as a mix of credit cards, a mortgage, a car loan, etc.
If you are working your way toward better credit, know that there are cards to help you do that. For those struggling to get approved for a credit card, the OpenSky® Secured Visa® Credit Card doesn't run a credit check, and the Capital One Platinum Secured Credit Card requires a low deposit of $49, $99 or $200, based on your creditworthiness. Those who qualify for the minimum deposit as low as $49 or $99 deposits, can still receive a $200 credit limit (which most secured cards offer but with a higher deposit upfront).
Once you get approved for either of these cards, ensure you pay off your balances each month on time and in full to be on your way to a better credit score.
Click here to view the Cardholder Agreement for the OpenSky® Secured Visa® Credit Card.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Your age. Other types of scores may consider your age, but FICO Scores
FICO Scores
Higher scores indicate lower credit risk. Experian classifies FICO credit scores lower than 580 as very poor, 580–669 as fair, 670–739 as good, 740–799 as very good, and 800–850 as exceptional.
don't. Your salary, occupation, title, employer, date employed or employment history. Lenders may consider this information, however, as may other types of scores.
Certain type of inquiries (requests for your credit report or score). Your FICO score does not count any inquiries you initiate, any inquiries from employers, or any inquiries lenders make without your knowledge. Any information not found in your credit erport.
Rent and utility payments: In most cases, your rent payments and your utility payments are not reported to the credit bureaus, so they do not count toward your score. The exception is if you use a rent-reporting service or if you are late on utility payments.
The main categories considered are a person's payment history (35%), amounts owed (30%), length of credit history (15%), new credit accounts (10%), and types of credit used (10%). FICO scores are available from each of the three major credit bureaus, based on information contained in consumers' credit reports.
Credit score calculations do not consider requests a creditor has made for your credit report for a preapproved credit offer, or periodic reviews of your credit report by lenders and creditors you have an existing account with. Checking your own credit also doesn't affect credit 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.
FICO creates different types of consumer credit scores. There are "base" FICO® Scores that the company makes for lenders in multiple industries to use, as well as industry-specific credit scores for credit card issuers and auto lenders. FICO's industry-specific credit scores have a different range—250 to 900.
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%).
FICO score is a type of credit score that has 5 components. 35% make up payment history, 30% make up how much you owe, 15% makes up the length of credit history, 10% makes up the credit mix and the other 10% makes up your new credit.
Highlights: While older models of credit scores used to go as high as 900, you can no longer achieve a 900 credit score. The highest score you can receive today is 850. Anything above 800 is considered an excellent credit score.
Lenders, credit card companies, and financial institutions feed your credit history to the credit bureaus. Credit scoring models generate credit scores based on the information pulled from your credit report. If you do not use credit accounts, you will not have a credit report, and thus, you will have no credit 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.
Late or missed payments. Collection accounts. Account balances are too high. The balance you have on revolving accounts, such as credit cards, is too close to the credit limit.
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.
The FICO credit-scoring model has been updated over the years, resulting in multiple versions of the score. FICO Score 8 is the most commonly used. But the version may vary by lender and credit product, like applying for a credit card versus financing a car.
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