Your FICO Score
FICO measures credit-worthiness. Underwriters use three credit bureaus, Equifax, Experian, and Trans Union, to determine your score in the following ways:
1. Delinquencies lower scores, and scores drop when new accounts are opened.
2. A long credit history is better than a new one, and too few revolving accounts makes it harder to evaluate the ability to manage credit. Before closing any accounts, consult with a lending professional.
3. Consumers with “maxed out” cards will be viewed as irresponsible use of credit and new lenders will assume you could have trouble making payments if you hit any bumps in the road. Too many revolving accounts indicate over-extension.
4. Tax liens, bankruptcies, and use of consumer credit agencies can all lower a FICO score. Agencies who charge for their service to help you build credit can often uncover outstanding debt that has already stopped reporting. This will always lower your score.
5. Small credit card balances and no late payments show responsibility.