The FICO score has become the most popular credit scoring model. In our society, when many of us have learned to depend on credit for many things (credit cards, houses, cars, furniture, etc), the FICO score has become a very important part of our lives. Our FICO scores tell potential creditors what type of risk we will be to lend to. It ends up determining our interest rates, and whether or not we will be accepted for loans or new lines of credit in the first place.
With FICO scores determining so much, we would hope that they would provide an accurate portrayal of the type of borrowers we truly are. Unfortunately, the FICO scoring model is far from perfect. There are several key factors that they do not take into consideration.
Here are 3 key items that the FICO score does not consider:
1. Your Age
While some other credit scoring models do factor your age with your score, your age is not a factor that is considered in the FICO scoring model. They do count the length of your credit history, which could be somewhat a representation of your age, but they don’t count your age directly. This is a key item that maybe should be considered, because most people become more responsible as they age, making them lower risks to lend to.
2. Your Marital Status
The FICO scoring model doesn’t take your marital status into consideration when determining your score. This is also a key item, because your marital status could potentially directly affect your ability to pay your debts back. With most marriages, there are two incomes coming into the household. That typically means more money, which means a better ability to pay back debts.
3. Your Employment Information
None of your employment information is considered when your FICO score is factored. Your potential lenders may take this into consideration when you apply for a loan or line of credit with them, but this type of information is not factored into your actual FICO score. No factors regarding your employment information or history are not taken into consideration when factoring your FICO score. But the stability of your work situation, and how much money you make, have a tremendous impact on your ability to pay back your debts.
How to increase your FICO score:
Your FICO score doesn’t take into consideration your age, marital status, or your employment information when factoring your credit score. Since you can’t call up the credit bureaus and ask them to raise your score because you got married, found a new job, or had a birthday, what can you do if you find yourself with a lower credit score than you think you deserve? One great way to work to increase your credit score is through credit repair. Most people have inaccurate items on their credit reports, and a credit repair agency could help to get those inaccurate items removed. So while credit repair may not give lenders a better idea of who you are as a person, it may help to make your credit reports a better reflection of who you are as a borrower.