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Understanding Your Credit Score: FICO Factors

19 Oct 2017

Understanding Your Credit Score: FICO Factors

Factors of Your FICO Score

Payment History

Your payment history reflects how you’ve dealt with payments. Any late or missed payments can hurt your credit score, along with any collections or legal actions. On-time payments will slowly raise your score over time.

Amounts Owed

You may hear this term referred to as your credit utilization. Ideally, your credit cards should have no more than 30% of the credit line used. If you have a $1,000 credit limit, you should keep the bill at or below $300 per billing cycle.

Length of Credit History

The longer your history, the higher your score. Don’t worry if your history isn’t very long, this factor has less weight than the two above.

New Credit

Includes the number of new accounts and credit inquiries. Avoid applying to lots of cards at once; more than 3 or 4 inquiries at a time will hurt your score.

Type of Credit Used

Creditors like to see a variety of credit, including revolving and installment. Try having a variety of credit available, such as personal loans, auto loans, and credit cards.

Weight of Each Factor

Payment History: 35%

Amounts Owed: 30%

Length of Credit History: 15%

New Credit: 10%

Type of Credit Used: 10%

 Understanding Your Credit Score: FICO Factors


Always pay your bills on time

This includes any credit cards along with utilities, car payments, and student loans. These can all reflect on your credit report, and one late payment can bring your score down.

Diversify your credit

If you only have a car loan (installment credit), apply for a credit card (revolving credit) to add another type of credit to your report.

Give it time

You won’t see your credit score change overnight; it takes time to develop a solid credit report. As long as you use your credit responsibly, you will see your credit score slowly rise as time goes on.

Want even more tips for how to improve your FICO credit score? We have a cheat-sheet on ways to improve your score. You can also get great financial resources, education, and free financial counseling from our partners at BALANCE.

Have more credit questions? Ask them below!

This article was adapted from our Understanding Your Credit Score seminar. See all seminars here.

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