What’s In Your FICO® Score

FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages reflect how important each of the categories is in determining your score.

Payment History 35%
Amount Owed 30%
Length of Credit History 15%
New Credit 10%
Types of Credit Used 10%

These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.

Payment History

• Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
• Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
• Severity of delinquency (how long past due)
• Amount past due on delinquent accounts or collection items
• Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
• Number of past due items on file
• Number of accounts paid as agreed
  

Amounts Owed

• Amount owing on accounts
• Amount owing on specific types of accounts
• Lack of a specific type of balance, in some cases
• Number of accounts with balances
• Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
• Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History

• Time since accounts opened
• Time since accounts opened, by specific type of account
• Time since account activity

New Credit

• Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
• Number of recent credit inquiries
• Time since recent account opening(s), by type of account
• Time since credit inquiry(s)
• Re-establishment of positive credit history following past payment problems

Types of Credit Used

• Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)
  

What's important is the mix of information, which varies from person to person, and for any one person over time.

Your FICO score only looks at information in your credit report. However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score.

How FICO® Scores Work

When you apply for credit – whether for a credit card, a car loan, or a mortgage – lenders want to know what risk they’d take by loaning money to you.

FICO scores are the credit scores most lenders use to determine your credit risk. you have three FICO scores, one for each of the three credit bureaus – Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time.

Taking steps to improve your FICO scores can help you qualify for better rates from lenders.

Savings Example

The higher your FICO® scores, you the less you pay to buy on credit – no matter whether you’re getting a home loan, cell phone, a car loan, or signing up for credit cards. For example, on a $ 216,000 30-year, fixed-rate mortgage:

If your FICO® score is... Your interest rate is... and your monthly payment is...

Example National Interest Rates:

760 - 850 5.91% $ 1,282
700 - 759 6.13% $ 1,313
680 - 699 6.31% $ 1,338
660 - 679 6.52% $ 1,368
640 - 659 6.95% $ 1,430
620 - 639 7.50% $ 1,510

As you can see in the example above using example rates, a person with FICO scores of 760 or better will pay $ 306 less per month for a $ 216,000 30-year, fixed-rate mortgage than a person with FICO scores below 620 – THAT’S A SAVINGS OF NEARLY $ 3,672 A YEAR. You can see that it pays – literally – to improve your FICO scores.

How to Get Started Improving Your Credit Score

The first step to improving your FICO scores is reviewing your current FICO scores and credit reports. We work closely with our clients reviewing their credit reports to ensure accuracy as well as educating them on ways to improve their credit. There are many companies which offer credit cleaning or credit counseling, but be sure to read the fine print for additional fees. Contact us about more information about your credit report...


Visit our Credit Repair page for information on how to fix your credit rating. Get your free credit report analysis and understand your FICO Score.