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What Are Credit Score Reason Codes?

Credit score reason codes can tell you what factors are having the greatest impact on your credit score.

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Many factors can impact your FICO® Scores, including both positive and negative information in each of your credit reports from Equifax, Experian, or TransUnion. The five major scoring factor categories can help you understand the relative importance of different types of information. However, the specific impacts of a change can depend on your unique credit file.

Credit score reason codes can help you understand what's impacting your specific FICO® Score the most right now.

What Are Reason Codes?

Reason codes are also called credit score risk factors or adverse action codes. These numerical or alphanumeric codes are tied to various credit scoring factors and may be accompanied by short descriptions.

If you check your own FICO® Score, the score will usually come with reasons that explain what's impacting that score the most. They will be listed in order, with the factor that has the most influence first. And, if the number of hard credit inquiries is impacting your score, but does not surface in the top four negative factors, it will be included as a fifth code.

For example, if you're new to credit, the number one factor impacting your FICO® Score might be the “length of time accounts have been established” which happens to be code “14” with FICO Scores.

Additionally, you may see reason codes when you apply for a credit account. A creditor may request one of your credit reports and a FICO® Score based on the report to help it make a credit granting decision. When a creditor uses a credit score in making a credit decision and either denies your application or gives you less favorable terms (such as an interest rate that's higher than the lowest-advertised rate), the lender is generally required under Federal law to provide you an adverse action or risk based pricing notice. This notice, will generally contain various information about the decision, the credit bureau and credit score model that the creditor used, the score's potential range, your score and key factors that adversely affected the score.

You Can Have Good Credit and Reason Codes

If your score is in the high 700s or 800s, most lenders would consider your score as very high and that helps you qualify for very attractive offers. People are sometimes surprised to see negative reason codes output when they have a high credit score. This generally reflects where they are just shy of getting maximum points for a given credit characteristic.

Use the Reason Codes as a Guide

Because reason codes can tell you what currently has the largest negative impact on your FICO® Score, you can use them as a guide to better understand what is impacting your credit. Keep in mind that a single incident could be tied to multiple reason codes.

For example, you might have missed a payment in the past and since brought your account current. Your credit report might include several reason codes related to the missed payment, such as how recent the missed payment is, the number of accounts reported with a missed payment and how severe is the missed payment information.

Louis DeNicola

Louis DeNicola is a finance writer based in Oakland, California. He specializes in consumer credit, personal finance, and small business finance, and loves helping people find ways to save money. In addition to FICO, Louis works with a variety of financial services firms, credit bureaus, and educational websites, including LendingTree, Credit Karma, and Experian.