What Impacts Your FICO Score?

If you are like most people you’re concerned about your credit score, aka FICO score.  The score ranges from 300 to 850, with the average being about 720. A FICO score is composed of 5 data categories, with 2 categories representing 65% of the impact on the score.

Payment History:

This is number 1 in terms of importance, impacting 35% of your score.  There are many items in this category like bankruptcies, liens, late payments, amounts past due, accounts in collection, etc. In the end, you can have a positive impact on your score just by making your payments on time.

Amounts Owed:

This is a close 2^nd, impacting 30% of your score.  It has to do with how many people you owe, as well as how much you owe them. It also considers how close your credit is to being “maxed out”. You can have a positive impact on your score by not having too many loans, keep the balances low, and stay well below your credit limit.

Length of Credit History:

This is a distant 3^rd, impacting 15% of your score.  It has to do with how long accounts have been opened and the time since the most recent activity. The longer your credit history, the better it is for you.

  

New Credit:

In 4^th place is New Credit, with a 10% impact.  It looks at the number of recently opened accounts, the number of credit inquiries and time since. Also, re-establishing positive credit history following past payment problems helps your score.

Types of Credit Used:

This also impacts your score by 10%. It has to do with the types of accounts you have. For example, loans like a mortgage, credit card, and installment loan.

You can visit the FICO website, www.myfico.com, for more information.

 

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