Lesson 1, Topic 1
In Progress

Credit Score vs. Credit Report

Brayan August 16, 2022

Credit Score vs. FICO Score


Based on the information on the credit report, the data is calculated into a credit score. 

A credit score is a 3-digit number that lenders use to evaluate how safe or risky you are as a customer.

What makes up a credit score?

Payment History

All on-time and late payments and public records. Each line of credit has a scheduled payment date where you can pay full, partial, or the minimum payment.

Try to pay your debt in full every month before your scheduled statement date. 

Accounts Owed

The percent of money you owe. FICO takes into account the ratio of money owed in comparison to the amount of credit available, also known as credit utilization. In other words, you may not have a lower FICO score if you have more credit available than debt.

Credit utilization is calculated based on your total outstanding balances compared to your total credit limit on all the lines of credit accounts you have. Some scoring models penalize you for exceeding 30% utilization on any single card or line of credit.

Credit Utilization Examples:

Length of Credit History

The length of credit history is how long your accounts have been open and active. 

Typically, the longer a person has had credit, the better their score is. The FICO score depends on how long your oldest account has been open as well as the age of the most recent credit line of account you have. It is a good idea to keep old unused credit lending accounts. Closing these accounts can hurt your score.  

New Credit (Recent Credit)

Recently opened accounts are considered new credit. Opening several new credit lines and/or getting many hard inquiries in a short amount of time can negatively affect your credit. Having a good mix of credit cards, vehicle loans, mortgages, and other financial loans. 

Hard inquires are used to approve credit lines and will deduct points. (Ext. applying for credit cards, auto loan application, student loan application, mortgage application)

Soft inquires are used by individuals to check their own credit score or by current lenders who are reviewing your credit report. (checking your score, background checks, and pre-approvals).