Your FICO Scores consider positive and negative information in your credit report. Late payments will lower your FICO Scores, but establishing or re-establishing a good track record of making payments on time will raise your FICO score.
How are FICO Scores are calculated and how each category below carries an important role to determine your FICO Scores.
These percentages are based on the importance of the five categories in general. For some groups—for example, people who have not been using credit long—the relative importance of these categories may be different.
Each category is important but the role will varies per person
The importance of any one factor in your credit score calculation depends on the overall information in your credit report. For some people, one factor may have a bigger impact that it would for someone with a much different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your FICO® Scores.
Therefore, measuring the exact impact of a single factor in how your credit score is calculated without looking at your entire report is impossible. Even the levels of importance shown in the FICO Scores chart are for the general population, and will be different from one person to another.
Your FICO Scores only look at information in your credit report
Your credit score is calculated from your credit report. However, lenders look at many things when making a credit decision such as your income, how long you have worked at your present job and the kind of credit you are requesting.
Payment history (35%)
The first thing any lender wants to know is your payment history and whether you’ve been paying your past credit on time. This is one of the most important factors in a FICO® Score, payment history.
Amounts owed (30%)
Having credit accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low FICO® Score.
Length of credit history (15%)
In general, a longer credit history will increase your FICO® Scores. However, even people who haven’t been using credit long may have high FICO Scores, depending on how the rest of the credit report looks.
Your FICO Scores take into account:
- how long your credit accounts have been established, including the age of your oldest account, the age of your newest 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
Types of credit in use (10%)
FICO Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans.
New credit (10%)
Research shows that opening several credit accounts in a short period of time represents a higher risk – especially for people who don’t have a long credit history.