At Sequin, we know that there are so many costs to being a woman — and credit shouldn’t be one of them. As we interviewed women about their credit experiences, one ask that kept coming up is a desire to understand how your credit score is calculated and how to improve it.
Here’s how we answered.
Your credit score is extremely important. Your credit score is pulled any time you go to take out a loan, such as a revolving line of credit (like a credit card) or an installment loan (student loan, business loan, car loan, mortgage). Sometimes, employers or landlords will pull your credit report to check to see that you are trustworthy, organized, and responsible. If your credit score is low, lenders view you as risky and are more likely to charge you a higher interest rate that could cost you many thousands of dollars over your lifetime.
FICO is the most common credit scoring tool. In fact, 90% of lenders use FICO to determine whether or not someone is creditworthy. While FICO illuminates the high-level factors that go into your credit score, we get that it is challenging to understand exactly what each of these factors are and what you can do about it.
Know your FICO
Below, we’ve created a visual to help. Because we live in a world in which FICO is king, and because a great credit score unlocks opportunities, we believe it is extremely important that women get their FICO score as high as possible. That said, you’ll notice from our infographic that the way that FICO is calculated disadvantages women not because the algorithm itself is biased, but because it relies on inputs that reflect societal injustices.
Disclaimer: A friendly and earnest reminder that content in the Sequin Project is not intended to be financial advice, and that the writers at Sequin are not certified financial advisors. If you’re looking to make any decisions related to the content above, please contact a certified financial advisor first.