10+ credit score facts most Americans don't know | finder.com

10+ facts about credit scores that most Americans don’t know

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credit score factsDid you know you’ve got more than one credit score? Also, don’t close that old credit card account just yet.

In 2018, the average credit score in the US is just under 700. But how much do Americans really know about credit scores?

Before we put in our two cents, scroll down our list of credit score facts and see what you know — and what you don’t. So, without further ado, here are some of the most surprising facts that most Americans aren’t aware of when it comes to their credit scores.

1. There are 5 factors that can impact your credit score

If you’re trying to maintain or improve your score, you should know what piece of the pie these five factors account for when calculating your score:

  • Payment history (35%)
  • Account balances (30%)
  • Credit history length (15%)
  • Types of credit (10%)
  • Credit inquiries (10%)

2. A credit report isn’t a credit score

Sure, they’re associated with one another, however, your credit score is determined by the information in your credit report. Your credit report is a breakdown of your credit management activity — payment history, open and closed accounts, debts you have, your credit limits and more. All of those factors come into play when calculating your credit score on a scale from 300-850.

Interested in what your credit score is?

Details Features
myFICO
myFICO
Get quarterly access to your most widely used FICO® Scores and a 3-bureau credit report
  • Get quarterly access to your most widely used FICO® Scores
  • Credit report change alerts
  • FICO® Score analysis
Go to site More info
Experian Credit Report
Experian Credit Report
Get your credit report and FICO score for just $1 with enrollment in Experian CreditWorks credit monitoring. Cancel anytime.
  • 3 credit reports
  • Track your FICO® score
  • Easy to use dashboard
Go to site More info
TransUnionCredit Report
TransUnionCredit Report
TransUnion credit score, monitoring and identity theft insurance.
  • Unlimited updates to your TransUnion credit score
  • Up to $1,000,000 in identity theft insurance
  • Personalized debt analysis
Go to site More info
Equifax Business Credit Monitor
Equifax Business Credit Monitor
Monitor your key business relationships to protect your company from losses.
  • Bankruptcy Alert
  • Derogatory Alerts
  • New Inquiry Alert
Go to site
GoFreeCredit.com
GoFreeCredit.com
$1 for a seven-day trial to get access to your credit score and credit report from TransUnion.
  • Credit reports from all 3 bureaus
  • Email alerts when your credit report changes
  • Up to $1,000,000 in identity theft insurance
Go to site More info
Details Features
Self Lender — Credit Builder Account
Self Lender — Credit Builder Account
Savings account that helps you build credit.
  • No hard credit inquiry
  • Available in all 50 states
  • It typically takes 60 days for new accounts to appear on credit reports
Go to site More info
The Credit People
The Credit People
Professionals work with you to clean up your credit and raise your credit scores. Cancel anytime.
  • 7-day trial for $19
  • Get access to your credit reports
  • Most customers see results within 2 months
Go to site More info
CreditRepair.com
CreditRepair.com
Online credit repair service.
  • Credit report repair
  • 24/7 credit monitoring and alerts
  • Score tracker and analysis
Go to site More info
CuraDebt: Tax Debt Relief Free Consultation
CuraDebt: Tax Debt Relief Free Consultation
Debt relief professionals helping individuals and small businesses nationwide.
  • Free consultation and 100% confidential
  • 15+ years experience
  • Debt relief help for credit cards, medical bills and taxes
Go to site
The Credit Pros: Legal Credit Repair
The Credit Pros: Legal Credit Repair
Online credit repair service that gives free consultations.
  • Delete inaccurate information on your credit report
  • Practical, honest credit advice from professionals
  • Get help setting realistic, reachable credit goals
Go to site More info
Lexington Law Credit Repair
Lexington Law Credit Repair
Law firm that specializes in credit repair.
  • Remove incorrect listings from your credit file
  • Get free access to your credit report
  • Personalized credit repair services
Go to site More info
CreditFirm.net
CreditFirm.net
Professional credit repair service that can help you create a step by step action plan. Cancel anytime.
  • Free credit consultation
  • Over 15 years of credit repair experience
  • Get help optimizing your credit file
Go to site

3. The credit scoring system was founded in the 1950s

That’s a long time ago, however, credit scores didn’t actually catch on until the 1970s. Before Bill Fair and Earl Isaac came along and founded FICO, to get approved for credit you’d have to meet with a banker or lender face to face and convince them that you were a trustworthy borrower.

4. Your credit score impacts more than your ability to borrow

Looking to rent apartment? Don’t be surprised if the landlord asks to run a credit check to see your credit score to gauge how you’ve managed your finances in the past. Also, lower credit scores tend to go hand in hand with higher car insurance premiums.

And while employers can’t check your credit report without your permission, your credit score is one of the factors they may be interested in when researching potential candidates.

5. Maxed credit cards can damage your score

Have you heard the term, credit utilization ratio? This refers to the balance you have on a credit card compared to the limit.

Let’s say your limit is $2,000 and you have a balance on $1,500 — you have a 75% credit utilization ratio. That could potentially drop your credit score if your credit report is ran while that balance sits on your card. Experts recommend to keep your credit utilization ratio under 30%.

6. Credit scores weren’t designed for consumers

Credit scores were implemented to help lenders make calculated decisions on whether to approve or deny a consumers application for credit.

So that means your credit score matters a whole lot — especially if you plan on applying for a credit card, or taking out an auto or home loan in the near future.

7. You probably have more than one credit score

It’s not as confusing as it sounds. There are three nationwide credit reporting bureaus — Equifax, Experian and TransUnion — and they all may have slightly different information on your credit file.

8. It’s possible for you to have no credit score

Not everyone has a credit history, in fact, the Credit Financial Protection Bureau reports that 1 out of 10 American adults are credit invisible. If you think you might fall into that statistic, don’t fret, there are steps you can take to build your credit history to get on the radar.

9. Closing your accounts can lower your score

The longer you’ve had an account open, the lengthier your credit history. If you were to close your oldest account, you could possibly see your score drop a few points.

Also, by closing accounts with little or no balance, you’d be shrinking your credit utilization ratio.

10. A college degree won’t make your score any higher

Your credit score has nothing to do with how far you’ve climbed up the ladder of academia. The only thing that matters is how you manage your credit — although a degree in finance may help you successfully juggle your accounts.

11. Checking your credit won’t damage your score

There’s a difference between soft and hard credit pulls. Checking your own credit is a soft credit inquiry, so there’s no damage done.

But what can slightly damage your credit score is making a series of hard credit inquiries at once — think credit cards, auto and home loans. Hard inquires stay on your credit report for 24 months and have the potential to shave a few points off your score for each inquiry.

Check your credit score today

12. Improving your score isn’t impossible

People who’ve filed for bankruptcy or have had their possessions repossessed may think that their credit score is irreparable, that’s not true. It may take some time for these black marks to disappear from your credit report, but once they do, you can learn from your mistakes and start working towards a healthy financial wellbeing.
Get a deeper understanding of your credit score

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