Understanding “Reason” codes in your FICO Credit Score

If you’re like most people, when you’re informed of your credit score, your focus is on the three digits of that score. That’s understandable because a lender is going to use that score to help determine whether or not to do business with you and under what terms. But the documents you receive with your credit score actually contain much more than just those three digits.

No matter where you get your score, the documents that accompany it will include up to four or five statements explaining why your score wasn’t higher. These statements are called reason codes and sometimes go by several other names. Some people call them score factors; others call them adverse action codes. They’re all the same thing.

The next time you see your credit score, regardless of where it comes from, look for the reason codes. They’ll be worded and displayed something like this:

705 – FICO Risk Score

-38 SERIOUS DELINQUENCY, AND PUBLIC RECORDS OR COLLECTION FILED (CODE 038)

-13 TIME SINCE DELINQUENCY IS TO RECENT OR UNKOWN (CODE 013)

-27 TOO FEW ACCOUNTS CURRENTLY PAID AS AGREED (CODE 027)

-04 LACK OF RECENT INSTALLMENT LOAN INFORMATION (CODE004)

The numbers preceding each statement are numeric identifiers; sometimes they appear with the text, and sometimes they do not.

The four (or five) factors are listed in order of the impact they have. In this example, the number one reason the credit score is not higher is “SERIOUS DELINQUENCY, AND PUBLIC RECORDS OR COLLECTION FILED.” That means the consumer has at some point had a delinquency on an account or a collection filed on an account that is still effecting their credit score.

Reason Codes and High Credit Scores

Even if you have a high credit score, you’ll still get reason codes. That’s because reason codes are included to show why your scores weren’t higher — no matter the starting point.

Reason codes – the road map to a better score

Reason codes can be very helpful as a road map to score improvement. They paint a very clear picture of the top reasons why your score isn’t higher. This takes the guesswork out of your score-improvement strategy.

Please see below for a detailed explanation of TransUnion Reason Codes.