Before the financial crisis heightened in 2007/08 creditors, including banks, mortgage companies and automobile dealers would consider offering credit at attractive interest rates with a FICO score averaging 650 t0 700. Today this average has risen to between 740 and 760, as creditors become more cautious in extending credit.

According to the findings of a survey conducted among lenders, consumers must be aware of five factors that often impact negatively on their credit reports and reduce their FICO scores. These five factors are:

1. The total amount of debt owed by the consumer

If a consumer has too much outstanding debt this will lower his FICO score. Too many consumers have simultaneously a combination of debt including a mortgage, auto loan, credit cards, departmental store debt, finance company debt, and possibly other debt. This burden of debt signals a potential risk to lenders and is almost certain to reduce the FICO score even if the consumer is paying his bills on time.

2. The consumer’s payment history

It is extremely important that consumers repay any credit that they have outstanding on or before the date the loan is due, or in the worst case scenario, prior to being 30 days past due. When a loan is 30 days past due, the creditor submits a report to one of the major credit bureaus and this will have a negative impact on one’s FICO score. The more late payments that are reported to a credit bureau, is the more likely the FICO score will be reduced and further credit difficult to obtain.

It is also important that the consumer’s payment history reveals that the consumer is paying much more than the minimum balance due on the bill. This is applicable mainly to credit card debt.

3. The consumer debt ratio (That is total credit vs. credit limits)

This is also mostly related to credit card debt. Although creditors may issue large credit card limits, one’s credit score is sensitive to the amount of credit used. The higher the debt on a credit card, the lower the FICO score will be. This may be difficult with some consumers using credit cards like cash to pay other bills and make purchases. This is not advisable if a consumer wants to maintain a high FICO score.

4. The age of the consumer’s credit history

This refers particularly to new debtors like college graduates and immigrants. Little credit history also reflects a low FICO score. The credit report needs to reflect some payment history. Acquiring utility and cell phone credit and departmental store credit cards with small limits helps build credit history.

5. The types of credit the consumer holds

This is a rather difficult assessment. However, lenders are cognizant of the mix of credit a consumer has. Too many departmental store credit cards, could impact on one’s FICO score or too many loans from financial companies. The credit mix should be evenly balanced to show credit responsibility and minimize the risk of lowering one’s FICO score.

In addition to these five factors, to maintain a high FICO score, consumers should also limit the frequency of applying for credit as each application lowers the FICO score.

Also, despite the financial challenges, consumers should make arrangement with creditors to pay ‘something’ on their accounts rather than ignoring the debt. Doing this will certainly pull the FICO score below 400, and cause ‘eternal’ credit damnation.