Are you confused about what factors into your credit score? In general, credit scores are created using complex formulas, but the basics are actually fairly simple to understand.

Five Factors Make Up Your FICO® Credit Score

There are several different companies that provide credit scores, and a FICO® Score is used by 90% of top lenders. While the exact FICO® Score formula is proprietary, the company discloses the basics of how it uses information from your credit report to calculate credit scores. 1  Additionally, according to FICO, these percentages refer to the general population, but some groups, such as consumers who have not been using credit long, the relative importance of the categories may be different.

Payment History: 35%

At 35% of the calculation, one of the most significant factors in your FICO® Score is your payment history — the historical record of whether you’ve paid your credit accounts on time. This information includes records from credit cards, retail accounts, mortgages and other types of loans. It also looks at public records including bankruptcies, foreclosures, lawsuits, wage attachment, liens and judgments. For each late payment, the scoring formula takes into account how late the payment was, how much was owed and how recent the delinquency was.

Amounts Owed: 30%

The next most important factor in your FICO® Score is the amount of money you owe lenders. This includes not just the total amount of your outstanding balances, but how that compares to the total amount of credit you’ve been extended, which is called your credit utilization ratio. Typically, the lower your credit utilization, the better.

Length of Credit History: 15%

Another factor in your FICO® Score is the length of your credit history, as those with a longer record of repaying loans are seen as being more creditworthy. The FICO® Score looks at the age of your oldest account, as well as the average age of all your accounts.

New Credit: 10%

This piece of a FICO® Score refers to the number of new credit accounts you’ve applied for or opened. This is relevant since those who apply for many new loans in a short period of time could be seen as posing a greater repayment risk to lenders.

Credit Mix: 10%

Additionally, another factor in your FICO® Score is the different types of credit accounts you have open, including credit cards, retail accounts, installment loans, vehicle loans and a home mortgage. And while you don’t need to have every type of credit account, this factor may be more important for people who have a limited credit history. 2

How to Use This Information

By understanding how information from your credit history is used to create your credit score, you can take steps to manage your credit accounts responsibly.

Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.

FICO is a registered trademark of the Fair Isaac Corporation in the United States and other countries.

Discover Financial Services and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Discover Financial Services and Fair Isaac do not provide “credit repair” services or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating. 

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