FICO Factors: What’s in Your Credit Score?

Whether it’s getting approved for a home loan, car loan or car insurance, your credit score plays a big role. And the score that creditors check most frequently is the FICO score. Needless to say, credit is confusing to a lot of people – and if you don’t know what goes into the makeup of a credit score,
just how do you know whether you have good credit or are in need of credit repair?

With that in mind, here’s a look at the five factors that are used to determine one’s FICO score. We call it “the FICO 5”:

  • Payment History: Payment history accounts for 35 percent of your FICO score – the single largest category. Simply put, have you paid all your past credit accounts on time? If you have, then you’re good in this area. If you haven’t, then you’ll likely take a hit in this category and have to work to repair credit.
  • Amounts Owed: This factor accounts for 30 percent of your FICO score. When you borrow money, you’re given a credit limit. This factor takes a look at how close you are to using all your available credit. The closer you are, the more your score will suffer.
  • Credit History Length: This represents 15 percent of your FICO score. The longer your credit has been established, the better it is for you and your score.
  • New Credit: Ten percent of your total score, this reflects any new sources of credit you’ve opened recently, as several recently opened accounts pose a greater risk to lenders.
  • Types of Credit: The final 10 percent of your FICO score, this category factors in your credit cards, retail accounts, loans and every other source of credit.

As you can see, there’s a lot that goes into your FICO score, which is why it’s important to be on top of all the various categories and to practice good debt management strategies, as your credit score could determine what you can and cannot finance.