The Patterns Of Your Credit Use

About 10% of your score is based on the pattern of your credit use.

According to Fair & Isaac, the creator of the FICO credit score, opening several credit accounts in a short period of time does represent a greater risk for lenders providing additional credit. This risk is increased for people who do not have long-established credit histories. This risk extends to requests for credit*, as indicated by the number of inquiries to the credit reporting agencies. (An inquiry is a request by a lender to get a copy of your credit report.)

*Since many people today tend to shop for credit, your FICO score distinguishes between searching for many new credit accounts and interest rate shopping, which is generally not associated with higher risk. In part, this is handled by treating a grouping of inquiries - which probably represents a search for the best rate on a single loan - as though it was a single inquiry.

Determining Patterns of Credit Use

FICO's score calculation considers:

• How many new credit accounts you have based on the account type (for example, how many newly opened credit cards do you have).
• How long has it been since you opened a new account. Again, the score looks at this by type of account.
• Have you re-established a good credit history following past payment problems. Re-establishing credit and making payments on time after a period of late payment behavior will help to raise a score over time.
• Length of time since credit report inquiries were made by lenders.
• How many recent requests for credit you have made, as indicated by inquiries to the credit reporting agencies.

Note: If you order your credit report from a credit reporting agency to check your report for accuracy, that inquiry does not count against you. This is considered a "consumer-initiated inquiry," not an indication that you are seeking new credit. Also, an inquiry does not count when a lender requests your credit report in order to make you a "pre-approved" credit offer, or to review your account with them, even though these inquiries may show up on your credit report.