How Often Is Your FICO Credit Rating Adjusted?

Consumers use credit for a variety of reasons. To determine whether to give you credit, lenders look at your credit rating, also known as your FICO score. Your FICO credit score ranges from 300 to 850, according to MyFICO, a website run by the company that compiles credit scores. Each score is individual. It's important to know what your score is and how often that score changes.

Identification

Your FICO score measures five key areas. Of the factors that are included in the score, 35 percent measures how well you pay your bills, 30 percent reflects how much debt you have, 15 percent accounts for the length of your credit history, 10 percent is the amount of new debt that you have applied for recently, and the final 10 percent reflects the mix of credit types present on your report. You can purchase your FICO score at myfico.com.

Considerations

According to MyFICO, your credit score is based upon the information contained within your credit report. It is not a stagnant number; it changes as the information within your credit report changes. This is important because positive changes in your credit data, such as reducing the outstanding amount of debt or an increase in a credit card limit, can cause your score to rise. Likewise, negative occurrences, such as late payments or the appearance of a tax lien, can lower your score.

Significance

Your credit score can impact many areas of your life. When you apply for credit, lenders will often check your score when making a decision on your credit application. If approved for credit, such as a loan or credit card, your score helps determine the interest rate that you will receive, which in turn determines how much that extension of credit will cost you in the long run. Some employers and insurers also check your credit prior to making an offer of employment or issuing an insurance policy.

Misconceptions

If you have poor credit, you are not destined to remain a subprime borrower forever. Subprime refers to consumers who have a credit score of 660 or below. Your most recent credit history will have more weight on your FICO score than past history. By making on-time payments and reducing debt, you can create new credit history and improve your credit, according to Bankrate.com. And the higher your score, the more credit items you will likely qualify for.

Warning

Avoid companies that promise to repair your credit or raise your credit score. This could be a scam, according to the Federal Trade Commission. Under the Fair Credit Reporting Act, consumers have the right to dispute credit errors for free. You don't have to pay someone to perform for this service. Under the FCRA, bureaus are not required to remove accurate negative data from your credit report. Negative account data will remain for up to seven years, with Chapter 7 and 11 bankruptcies remaining for up to 10 years, and unpaid tax liens remaining for up to 10 years in California and indefinitely everywhere else.