By Jeanne Kelly on behalf of FICO
Your FICO® Score. It's a widely used score based on an algorithm that evaluates your credit usage and history. It's become the industry standard for credit scores; and although there are other credit scoring companies out there, 90% of lenders use and trust FICO® Scores to help them make their credit decisions.
I'm A Fan Of FICO
I've worked hard my entire professional life to focus on FICO and to raise my clients' awareness about the importance of their FICO® Scores. For example, I frequently write about FICO and I always advise my clients to focus on their FICO® Scores because, chances are, the lenders they're getting credit from are probably using a FICO® Score to help them make their credit decisions.
FICO is a trusted name in credit and I'm not shy about saying I'm a fan of what they do. I realize that you have only a limited amount of time in your day to focus on your credit, so I suggest focusing on your FICO® Scores because that will most likely give you the biggest win among lenders.
FICO Quiz Reveals Surprising Insight
Recently the FICO organization conducted a poll. It wasn't a scientific study, it was more of a fun quiz. The quiz may have been more fun than statistical but it still revealed some surprising facts about what people know (or don't know) about their FICO® Scores.
On the plus side, the quiz revealed that 95% of respondents knew what a very good FICO® Score was. (Do you know? It's 750... how does YOUR score stack up?). And 80%-81% of respondents knew that income was NOT part of your FICO® Score and they knew what could harm your scores. (Good work, respondents!)
But the news wasn't all rosy, and the quiz revealed a few areas where people weren't fully up-to-speed on FICO® Scores. For example, 50% of respondents thought that a credit card utilization of 30% is ideal. (In fact, the preferred credit card utilization varies depending on your credit profile) And 12% of respondents thought that closing a credit card would have a positive impact on credit scores. (Rather, healthy usage and regularly paying off your credit card is what has a positive impact. Closing a card could even hurt your scores!).
The quiz showed that people are gaining an understanding of FICO® Scores (yay!) but are still confused about the things that can impact their score. So I'm looking at my writing and speaking calendar for the rest of the year and figuring out how I can weave even more education into what I share. My work here isn't done yet!
Want to learn more about FICO Scores?
If you're interested in learning more about the difference between FICO Scores and other scores and how FICO Scores can help you, I recommend checking out the purely educational FICOScore.com site. There's a lot of educational content on there and even a place to share you credit confusion stories.