FICO Facts
What do the letters FICO stand for?
Fair Isaac Corporation
What percentage is PAYMENT HISTORY?
35%
What does APR stand for?
Annual Percentage Rate
A borrower consistently pays bills on time. Which FICO factor is affected most directly?
Payment History - 35%
A card limit is $1,000 and the balance is $200. What is the utilization percentage?
20%
False: Debit cards use money you already have, so ordinary debit card purchases don't build credit.
What is the usual range for a standard FICO credit score?
300 - 850
What percentage is LENGTH OF CREDIT HISTORY?
15%
What is a credit limit?
The maximum amount a lender allows you to borrow on the card.
A cardholder uses $900 of a $1,000 limit. Which factor is affected most directly?
Amounts owed/ credit utilization - 30%
A card limit is $2,000 and the balance is $1,500. What is the utilization percentage?
75%
True or False: Checking your own credit score will lower it.
False: Checking your own score is a soft inquiry and doesn't hurt your credit.
What does a credit score help a lender estimate?
How likely a borrower is to repay their debts/ credit risk
What percentage is CREDIT MIX?
10%
What is a minimum payment?
The smallest amount required by the payment due date to keep the account current.
Someone opens three new cards this week. Which factor is most directly involved?
New credit - 10%
True or False: Paying only the minimum usually avoids all credit card purchase interest.
False; the unpaid balance may accrue interest.
True or False: You must carry a balance on your credit card and pay interest to build good credit.
False: Paying your full statement balance on time can build credit without paying interest.
Which is NOT directly used to calculate a FICO score: income, payment history, or credit mix?
Income
What percentage is AMOUNTS OWED?
30%
What is the term for the extra money a credit card company charges when you borrow money and don't pay off your full statement balance?
Interest
A person has kept the same credit account open for 15 years. Which factor is involved?
Length of credit history - 15%
Sarah has a credit card with a $1,500 limit and currently owes $600. How much available credit does she have, and what percentage of her limit is she using?
$900 available, 40% utilization
False: Income isn't one of the five factors used to calculate a FICO score.
What is the difference between a credit report and a credit score?
Report = detailed credit-account history; score = numerical summary of credit risk
What percentage is NEW CREDIT?
10%
What is the difference between a debit card and a credit card?
A debit card uses money from your bank account. A credit card allows you to borrow money that you must repay.
Someone responsibly manages both a car loan and a credit card. Which factor is involved?
Credit Mix - 10%
Michael owes $500 on a credit card with a $1,000 limit. He makes a $200 payment. What was his credit utilization before the payment, and what was it afterward?
Before: 50%. After: 30%.
True or False: Once you have a bad credit score, you're stuck with it forever.
False: Credit scores can improve over time with responsible credit use, including making payments on time.