Topic: What's In Your FICO Score?
by Tim Storm, Certified Mortgage Planning Specialist

Ever wonder what exactly goes into making up your FICO score? There are five basic categories and several factors within those that account for your credit rating.

Why It Matters: In order to improve your FICO score, it is important to know what factors help to determine it. This information gives you more control over your credit rating so that you can make wise choices in managing your credit.

What You Need to Know: Here are the five categories that make up your credit score, how much they count toward your score, and what types of information they include:

  1. 35%-Payment history
    • Do you pay your bills, and how do you pay them? On time or late? (late pays, collections, charge-offs, foreclosures, repossessions)
    • Public record (bankruptcies, liens, judgments, suits, garnishments)
    • Amount past due on delinquent accounts, severity of delinquency (how long something is overdue), and how long since something has been overdue
    • Number of past due accounts
    • Number of accounts paid as agreed
  1. 30%-Amounts owed
    • Balances on accounts, and also balances on different types of accounts
    • Number of accounts with balances
    • Proportion of credit limits used (it is best to keep your credit card balances under 30% of your available limit)
    • Proportion of installment loan amounts still owing
  1. 15%-Length of credit history
    • Length of time credit accounts have been open
    • Time since account activity
  1. 10%-Mix of Credit
    • You must have a credit card account in order maximize your score potential.
    • Best mix for new credit users is 2-3 credit cards, and/or an auto loan and/or a mortgage loan.
  1. 10%-Inquiries
    • Number and frequency of newly opened accounts
    • Number of recent credit inquiries (applications for new credit)
    • Time since re-establishment of positive credit history since last payment problems or adverse public record

 


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