Fico Codes That You Need To Understand

Your credit report can be confusing. It will show dozens of codes that are not explained and some are not used by the different credit bureaus. Here are a few of the adverse codes that you need to be aware of in order to begin to fix your credit score in hopes of getting an auto or other type of loan.

Recent financial reform laws require that a lender provide you with a risk-based pricing notice even if you are approved for a loan. The notice must include ''The key factors or reason codes that adversely affected the credit score, with a requirement to disclose five ‘reason codes’ any time inquiries are a ‘key factor’ that adversely affected the score.''

FICO created 40 codes to simplify the process. They are meant to explain why you were turned down for a loan or did not qualify for the best possible interest rate. The following list includes reasons with the corresponding code number for Equifax listed first, TransUnion second and Experian third. These are the three major credit bureaus in North America. ''N/A'' means that a bureau doesn't use that code.

Amount owed on accounts is too high – 1,1,1
Level of delinquency on accounts – 2,2,2
Too few bank revolving accounts - 3,N/A,3
Too many bank or national revolving accounts – 4,N/A, 4
Too many accounts with balances – 5,5,5
Too many consumer finance company accounts – 6,6,6
Account payment history is too new to rate- 7,7,7
Too many recent inquiries last 12 months – 8,8,8
Too many accounts recently opened – 9,9,9
Proportion of balances to credit limits is too high on revolving accounts – 10,10,10
Amount owed on revolving accounts is too high – 11,11,11
Length of time revolving accounts have been established – 12,12,12
Time since delinquency is too recent or unknown – 13,13,13
Length of time accounts have been established – 14,14,14
Lack of recent bank revolving information – 15,15,15
Lack of recent revolving account information – 16,16,16
No recent non-mortgage balance information – 17,17,17
Number of accounts with delinquency – 18,18,18
Date of last inquiry too recent – N/A, 19, N/A
Too few accounts currently paid as agreed – 19,27,19
Length of time since derogatory public record or collection is too short – 20,20,20
Amount past due on accounts – 21,21,21
Serious delinquency, derogatory public record or collection filed – 22,22,22
Number of bank or national revolving accounts with balances – 23,N/A, 23
No recent revolving balances – 24,24,24
Number of revolving accounts – 26,N/A,26
Number of established accounts – 28,28,28
No recent bankcard balances – N/A,29,29
Time since most recent account opening too short – 30,30,30
Too few accounts with recent payment information – 31,N/A,31
Lack of recent installment loan information – 32,4,32
Proportion of loan balances to loan amounts is too high – 33,3,33
Amount owed on delinquent accounts – 34,31,34
Serious delinquency and public record or collection filed – 38,38,38
Serious delinquency – 39,39,39
Derogatory public record or collection filed – 40,40,40

These forty codes are meant to simplify the process and will, now that you have an explanation of what each means.

By: Frank Butler

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