Credit score risk?
Risk factors accompany your credit score and tell you why you may have been turned down for a loan or credit card, service, even the fact that you received a higher interest rate than you would like.
These factors vary depending on the model used to calculate your credit score. Scoring models analyze the data in your credit report.
Lenders use many scoring models, but the most popular are FICO and VantageScore. Each yields a three-digit score, with higher scores indicating a lower statistical probability of defaulting on debts. When these models determine your score, they also identify the information in your credit report that had the greatest negative influence on your credit score, and present that information as risk factors.
Whenever your credit score affects a lender’s decision to reject your application for credit, or causes you to receive an offer of credit or a loan at a higher interest rate than the best available, the lender must provide an explanation.
Most outlets that allow you to check your own credit score also provide a list of risk factors, and many also list one or more positive factors.
All of the credit scoring models you are likely to encounter are broadly sensitive to many of the same basic credit management behaviors: late and missed payments, high credit card balances, and excessive debt tend to lower credit scores.
In contrast to making timely payments, low credit balances and a wide variety of credit accounts tend to promote higher scores.
Risk factors show you what specific influences are lowering your credit scores and can help you focus your efforts on improving them.
Checking your risk factors will help you understand how they work and how they are generated. That knowledge can give you insight into how to prioritize your actions and better manage them.
Your credit score, and the risk factors associated with it, are a reflection of the information stored in your credit report at the time the score is calculated. Because the payment and credit usage data on your credit reports is continually updated, your credit score generally changes frequently, and the factors that influence your score may also change.