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Get Your FREE CREDIT REPORT and FREE CREDIT SCORE!
What's in a FICO Score:
1. Payment History: Approximately 35% of your score.
Payment information on many types of accounts.
These will include credit cards (such as Visa, MasterCard, American Express
and Discover), retail accounts (credit from stores where you do business, such as department store credit cards), installment
loans (loans where you make regular payments, such as car loans), finance company accounts and mortgage loans.
Public record and collection items — reports of events such as bankruptcies, judgments, suits, liens, wage attachments and collection
items. These are considered quite serious, although older items will count less than more recent ones.
Details on late or missed payments and public record and collection items — specifically, how late they were, how much was owed,
how recently they occurred and how many there are. A 30-day late payment is not as risky as a 90-day late payment, in and of itself.
But recency and frequency count too. A 30-day late payment made just a month ago will count more than a 90-day late payment from
five years ago. Note that closing an account on which you had previously missed a payment does not make the late payment disappear
from your credit report.
How many accounts show no late payments. A good track record on most of your credit accounts will increase your credit score.
2. Amounts Owed: About 30% of your score.
The amount owed on all accounts. Note that even if you pay off your credit cards in full every month, your credit report may show a
balance on those cards. The total balance on your last statement is generally the amount that will show in your credit report.
The amount owed on all accounts, and on different types of accounts. In addition to the overall amount you owe, the score considers
the amount you owe on specific types of accounts, such as credit cards and installment loans.
Whether you are showing a balance on certain types of accounts. In some cases, having a very small balance without missing a payment
shows that you have managed credit responsibly, and may be slightly better than no balance at all. On the other hand, closing unused
credit accounts that show zero balances and that are in good standing will not generally raise your score.
How many accounts have balances. A large number can indicate higher risk of over-extension.
How much of the total credit line is being used on credit cards and other "revolving credit" accounts. Someone closer to "maxing out"
on many credit cards may have trouble making payments in the future.
How much of installment loan accounts is still owed, compared with the original loan amounts. For example, if you borrowed $10,000
to buy a car and you have paid back $2,000, you owe (with interest) more than 80% of the original loan. Paying down installment
loans is a good sign that you are able and willing to manage and repay debt.
3. Length of Credit History: About 15% of your score.
How long your credit accounts have been established, in general. The score considers both the age of your oldest account and an
average age of all your accounts.
How long specific credit accounts have been established.
How long it has been since you used certain accounts.
4. Pattern of Credit Use: About 10% of your score.
How many new accounts you have. The score looks at how many new accounts there are by type of account (for example, how many newly
opened credit cards you have). It also may look at how many of your accounts are new accounts.
How long it has been since you opened a new account. Again, the score looks at this by type of account.
How many recent request for credit you have made, as indicated by inquiries to the credit reporting agencies. Note that if you order
your credit report from a credit reporting agency — such as to check it for accuracy, which is a good idea — the score does not count
this. This is considered a "consumer-initiated inquiry," not an indication that you are seeking new credit. Also, the score does not
count it when a lender requests your credit report or score in order to make you a "pre-approved" credit offer, or to review your
account with them, even though these inquiries may show up on your credit report.
Length of time since credit report inquiries were made by lenders.
Whether you have a good recent credit history, following past payment problems. Re-establishing credit and making payments on time
after a period of late payment behavior will help to raise a score over time.
5. Types of Credit in Use: About 10% of your score.
What kinds of credit accounts you have, and how many of each. The score is a complex formula that takes into account both the types
of account, their mix and the total number of credit accounts you have under your name.
Credit account types include: credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. In
general, the effect of how many accounts you have and their mix would vary with your income and other factors. It is not recommended
that you open new accounts just to "diversify" your credit profile. This part of the credit score is more important if you do not
have a lot of other credit information on your file, as would happen for example to young adults.
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