The median FICO score of all US citizens is 720.
What is a FICO score? It’s a prediction of the likelihood that the individual will get a 90 day late on any tradeline in the next 24 months.
What is a FICO score comprised of?
35% of a FICO score is based on Payment History
Recency – this is the most important! 0-6 months is the worst, then 7-23, then 24+
Frequency
Severity
30% of a FICO score is based on Balances
Revolving Credit – in excess of 50% of total revolving credit will drop the score, 75% will severely hurt it; individual credit lines also matter, but not as much as total revolving credit
Home Equity Lines above approximately $35,000 are viewed as installment loans for FICO scoring purposes (the above information does not have as much degree of weight as HELOCs or other installment loans)
15% of a FICO score is based on Credit History
30 years of credit depth is viewed as mature, anything under is viewed as young credit
10% of a FICO score is based on Type of Credit
Tradelines are counted by category (auto, mortgage, credit cards, etc) to see general credit patterns
Buy now – pay later financing is horrible for credit/drops FICO scores – 23% of Americans have these
10% of a FICO score is based on Inquiries
Only count inquiries in the past 12 months
All Mortgage inquiries made within the last 30 days count as only 1 inquiry
Inquiries for people with BKs or those with thin/young credit can drop FICO scores up to 30pts for each inquiry
*Paying off collections older than 2 years will typically drop the individual’s FICO score – it triggers an alert that there is a collection. The FICO factor codes do not recognize new collections differently than they recognize a payment to a collection.
*Performance after a BK or Judgment is very important. FICO factor codes look at recency, % of tradelines (it’s suggested to leave tradelines out of BK), # of inquiries & performance after the BK or Judgment.
