What Your Credit Score Is Trying to Tell You

Have you developed the habit of regularly checking your credit reports and scores? If so, kudos to you. You’re already doing a better job monitoring your credit than most Americans. However, if your focus remains fixed solely on those three-digit scores, you could be missing some valuable and helpful information — your “score factors.”

What Are Score Factors?

What if I told you that I could give you advice and guarantee it will improve your scores? And not just obvious, high-level stuff like “pay your bills on time” or “get that judgment deleted.” I’m talking about customized advice, specific for you and only you.

Whenever you access a copy of your credit reports with your FICO or VantageScore credit scores, you may notice that that there are generally four (or more) statements included alongside your scores. These statements, also called score factors codes, explain why your credit score isn’t higher.

Score factors are generally expressed in two digits. Each code represents a specific reason where you sacrificed credit score points in that scoring model. For example, if you were to look at an actual credit report received by a lender or credit card issuer, underneath your credit scores you’d find something that looks like this:

Your Credit Score: 560
(40) Derogatory Public Record or Collection
(85) You Have Too Many Inquiries
(11) Amount Owed on Revolving Accounts Is Too High
(13) Your Most Recently Opened Account is Too New

Your Credit Score Offers a Roadmap to Better Credit

The above score factors are actually a hybrid of the FICO and VantageScore score factors. You can see a full list of VantageScore’s score factors here. These factors are specific to your actual score, so paying attention to areas identified as obstacles and working to resolve them can be a great place to start if you’re looking for a roadmap to a better credit score.

It would be impossible to cover all of the reason codes in depth in one, short article, as there are hundreds of them. Fortunately, you don’t have to be knowledgeable about all of the score factors, because only four of them matter to your scores at any given point in time.

Related: How Often Does Your Credit Score Change?

There are, however, score factors that seem to come up again and again – certainly some of the more common reasons people don’t have higher scores. These factors tend to be specific to the presence of derogatory information, excessive credit card debt relative to your credit limits, too many accounts with a balance, too many inquiries in the previous 12 months, and a credit file that is too young.

Whenever you’re wondering why your credit scores aren’t higher, it’s not uncommon to hit the web looking for information about credit scores, what makes them tick, and how to increase your credit score. That’s an entire waste of your time. The answer – customized to your situation and credit profile – has already been made completely evident by either FICO or VantageScore in the form of these factors.

For example, say you have a VantageScore of 750, and the number one factor explaining why your score isn’t higher is that the balances on your credit cards is too high.

Would you try to pay down your car loan faster? Would you pay off one of your smaller dollar student loans? Would you go so far as to tap your nest egg to pay off a mortgage or home equity loan? Some of those actions could improve a person’s credit score. But if you did any one of them, you’d be completely ignoring the very specific advice that the scoring system was trying to give you, personally. Auto loans, mortgages, and student loans are not credit cards.

Now, if you’d have listened to what your VantageScore factors were telling you, then maybe you would have used the same funds and paid down a credit card or paid it off entirely. Maybe you’d have paid off a retail store card, or a few of them. And not only would your score have improved, it may have improved considerably.

Just follow the roadmap put forth by your score factors, and your credit scores will have no choice but to improve.

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John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. He has written four books on the topic and has been interviewed and quoted thousands of times over the past 10 years. With time spent at Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.

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