Bad Credit History – Role Played By Fico Scores


ADVERTISING DISCLOSURE: is an independent, advertising-supported web site. receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Building Credit History » Bad Credit History – Role Played By Fico Scores

Bad Credit History – Role Played By Fico Scores

Updated: December 26, 2012

The content is accurate at the time of publication and is subject to change.
When you want to apply for a loan or apply for credit of any type, every money lender will ask you for your credit score or what is known as FICO score. Fico scores were launched by a company called Fair Isaac Corporation. Your Fico report essentially is the gist of your financial transaction at any given time. So how really is your Fico score calculated? Fico has a score system ranging from 300 to 850 points. There are many contributing factors in deciding your score. If you have a score above 700, you are good in the money lender`s books as the future borrower. If you have a score of 650 or below, then you are considered to have a bad credit history and it might be difficult for you to apply and obtain loans in the future if you do not repair your scores. The scores are given based on the two most important things of your financial transactions, that is, your outstanding credit balance and all your previous payments. The distribution of your credit scores is as follows: Your previous payments will account for 35 percent of your total credit score; all pending payments or outstanding credit accounts for 30 percent of your score; 15 percent of your score holds for the period of time you have taken the credit; 10 percent of your scores stands for all new credit applications; and finally 10 percent of your scores account for the kind of credits you have taken in the past. All these factors are compared with thousands of others requesting for a Fico score and then you get your score result. When you know how to read your Fico scores, it becomes easy for you to understand what is making your scores go down. You can work on that and repair your credit, to have a healthy financial record. Your Fico scores will only be calculated at the time when it is requested so the most recent financial transactions are the most important ones. Making sure that the outstanding balance of your credit cards and all your bills are cleared by the due date at all given times. That way, whenever your Fico scores are calculated, your timely payments are reflected. When does a Fico score go bad? This happens when you do not pay your bills in a timely way and also your scores are affected if you have ever applied for bankruptcy. All your old outstanding balances will also matter when your scores are being calculated, so making sure they are all cleared off is important too. But because your Fico scores reflect the most recent financial transaction, you should handle all your recent loan repayment cycles and bill payment cycles very cautiously. Any number of recent late payments can easily get your scores down. Fico scores can easily be obtained through internet or by signing up for any credit report company. Reading your Fico score at least once in every six months is a very healthy financial habit. It will help you realize your financial situation and puts you in a better position to plan your future.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Autumn 2018: Best Rewards Credit Cards for Thanksgiving Shopping

Autumn 2018: Best Rewards Credit Cards for Thanksgiving Shopping

Posted: November 8, 2018

Thanksgiving is coming, and whether you are hosting a meal or coming as a guest, your spendings are going to accumulate faster than you can notice. A holiday feast is a costly matter – each year Americans spend around $50 on a Thanksgiving ... Continue reading
The Best Credit Card for Earning Cash: Discover it® Cash Back

The Best Credit Card for Earning Cash: Discover it® Cash Back

Posted: November 2, 2018

You’ll have hundreds of dollars in your pocket in no time because you’ll earn money back on every purchase you make with this card. There are no restrictions on the amount of cash back you can get, and Discover even matches every penny you ... Continue reading
Top 5 Cards for Travel from Our Partners: Autumn 2018 – Expert’s Choice

Top 5 Cards for Travel from Our Partners: Autumn 2018 – Expert’s Choice

Posted: October 10, 2018

Nights are drawing out, the wind is colder every day and you already feel the lightest breath of winter on your face - autumn is here. Holidays are over, kids are back to school and all you are left with are hefty holiday bills that you ... Continue reading
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!