Credit Score FAQs

Question: What is a FICO Score?

Answer: The FICO score is a branded credit score developed by Fair Isaac Corporation. Most lenders use the FICO score. A FICO score can only be purchased through If a consumer purchases their credit score from anywhere else it is not their FICO score. Each of the consumer credit bureaus has their own version of a credit score. Equifax calls its score BEACON, Experian – PLUS, and TransUnion – EMPIRICA.

Question: Why Are the Credit Scores From Each Credit Bureau Different?

Answer: Each of the three credit bureaus – Equifax, Experian, and TransUnion – uses a slightly different formula calculation to come up with a credit score. In addition, each bureau has different information included in the credit report. Not all creditors report to all three bureaus, so one or two of the credit reports might contain account history the others don’t.

Question: How Is the Credit Score Calculated?

Answer: A consumer’s credit score is calculated using five pieces of information:

  1. Payment history
  2. Debt level
  3. Age of credit
  4. Mix of credit
  5. Credit inquiries

Question: Will Multiple Loan Applications Hurt a Credit Score?

Answer: The short answer is – it depends. If a consumer shops for a loan within a14-day period, their credit score will probably be safe. Depending on the type of lender, the time frame could increase to as much as 45 days. Most credit scoring models have been designed to recognize when a consumer is rate shopping and avoids penalizing them. For example, the most recent FICO scoring formula ignores all mortgage or auto loan inquiries made within a 45-day window. Older versions of the FICO score used a 30-day or 14-day window. Once the “window” has passed, loan inquiries are bundled together and treated as one inquiry. Whether (and when) a credit score will be influenced by rate shopping depends on the credit scorer.

Question: Does Closing a Credit Card Help or Hurt a Credit Score?

Answer: It’s more likely that closing a credit card will hurt a credit score than it will help. If the credit card has a balance, the credit score will definitely drop after a consumer closes the card. That’s because 30% of the credit score is based on credit utilization – the amount of available credit being used. When a credit card is closed, there is no available credit, so the credit utilization calculation goes up to 100% immediately. As a result the credit score drops. Even if the credit card has a zero balance, the total credit utilization – which considers all credit card balances and available credit – is better because there is unused credit available. If other credit cards have balances of over 30% of the credit limit, closing a single credit card could hurt the credit score. Also, if a consumer has no other credit cards, or their only other cards are store credit cards (and they are closing a major credit card), their credit score could drop. The mix (or type) of credit is 10% of the overall credit score and looks for the consumer’s experience with different types of credit products, including both credit cards and loans. Please note, closing the oldest credit card could impact the credit score in terms of credit age (15% of your credit score) as well as credit utilization.

Question: How Often Does a Credit Score Change?

Answer: A credit score is like a snapshot picture. A consumer can check their credit score one day with one of the credit bureaus and notice that it’s moved up or down from the previous day. A credit score can change daily depending on how often the credit report is being updated. Creditors, lenders, courts and others are continuously making updates to credit reports throughout the month and the resultant credit score will change to reflect those updates.

Question: Will a Prepaid Credit Card Improve a Credit Score?

Answer: No. Prepaid Credit Cards are not credit cards (they’re more like VISA-branded debit cards), and they’re not listed on a credit report. A Secured Credit Card on the other hand, requires a deposit similar to a prepaid credit card, but purchases don’t take away from your deposit. Instead, you’re required to make payments on your balance because it’s an actual credit card. Certain secured credit cards are listed on a credit report and can improve a credit score if used correctly.