We’ve created a one-stop snapshot of what creates your FICO score.

Trying to understand your credit score can feel like trying to solve an impossible math problem sometimes. Keeping all of the factors straight for each system can be overwhelming. No more scouring the internet for the answers to all of your credit score questions! We’ve compiled them here for a one-stop snapshot of what creates your FICO score.  

Understanding Your Credit Score: FICO Factors

August 15, 2016

We’ve created a one-stop snapshot of what creates your FICO score.

Trying to understand your credit score can feel like trying to solve an impossible math problem sometimes. Keeping all of the factors straight for each system can be overwhelming. No more scouring the internet for the answers to all of your credit score questions! We’ve compiled them here for a one-stop snapshot of what creates your FICO score.

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%

 This pie chart shows you how much each part of your FICO credit score weighs in the creation of your score.


FICO Tips





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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