FICO scores, maintained by the Fair Isaac Credit Organization, are calculated from a number of different pieces of credit data that is found within your three credit reports. There are five different categories of data that this information can be grouped into. There are specific percentages that reflect how important each individual category is when it comes to determining your overall FICO score.
- 35% of your credit score is determined based on your payment history.
- 30% of your credit score is determined based on your amounts owed.
- 15% of your credit score is determined based on your length of credit history.
- 10% of your credit score is determined based on your types of credit in use.
- 10% of your credit score is determined based on your new credit history.
These percentages are designed to show you the importance of these five categories for anyone that is a part of the general population. For certain groups, such as people that have not been using their credit for very long, the importance of each of these individual categories can be a little bit different.
Payment History
This category includes payment information on certain types of accounts including installment loans, credit cards, retail accounts, mortgages and finance company accounts. This category also includes the presence of any public records that are adverse such as suits, wage garnishments, judgments, bankruptcies and liens for example. This category also includes the severity of the delinquent accounts, the amount that is past due on the account, the recency of or time sense the items became past due, any adverse public records or collection items, how many past due items currently on the record and how many accounts are being paid as agreed upon.
Amounts Owed
This category includes the amount that is currently owed on accounts, the amount that is currently owed on certain types of accounts, how many accounts actually hold balances, whether or not there is a lack of a specific balance type in certain instances, the proportion of the credit lines that are being used and the proportion of the amounts of the loans that are still owed.
Credit History Length
This category is going to include the time since the accounts were opened, the time since the accounts were opened based on the type of account and the time sense the last account activity occurred. Credit history length plays an important role in determine how you have been managing your credit, especially if you do not have a lot of credit to speak of.
New Credit Accounts
This category of your credit score is judged based on the number of accounts that have been recently opened as well as the proportion of accounts that have been recently opened based on the type of the account.
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Let me jump in and clarify something that some readers may not realize from the first sentence of your post. FICO is not a “fair” or benevolent “organization.” It is Fair Isaac Corporation, a publicly traded, ruthlessly for-profit corporation. Its mission is to make money by promoting the use of consumer credit and by extending the reaches of credit scoring into every aspect of our lives, including employment and housing.
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