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What Makes Up Your FICO Score?

Perhaps the most common question about credit is, "What makes up my FICO Score?"

That may not surprise you since you're reading this article to answer that very question. But what may surprise you is that the question should really be changed to read, "What makes up my FICO Scores?- emphasis on the "s". That's right, you actually have many FICO scores.

This might be somewhat confusing because you have seen other names associated with your FICO score, such as "Empirica" (TransUnion) or the "Beacon Score" (Equifax). However, these are simply names the credit bureaus use to associate the FICO score with the credit reports they generate. The truth is that all of these scores are calculated using mathematical models developed by the Fair Isaac Corporation.

So, each of your FICO Scores should be identical, right? That would certainly make life more simple, but it's not the case.

Your FICO scores are developed using information the credit bureaus keep on file about you, and none of them actually track and collect the same information. Therefore, you can count on your scores being different. Include the fact that FICO Scores are dynamic and theoretically change all the time as information on your credit report changes, and you will soon realize that it's difficult to ever really know what your FICO scores are at any given moment.

More important than simply knowing the numeric value of your credit score, every consumer should know and understand the five basic categories of data in a credit report that affect FICO Scores. Although they can fluctuate in importance depending upon your personal experience with credit, if you commit the following categories to memory and let them guide your personal financial decisions on a daily basis, Fair Isaac's complex mathematical models should be kind to you in the long run.

How FICO Scores are Calculated

1. Payment History: 35%

There's nothing secret about this. Positive payment history will always be king in the credit world. So, make your payments on time and avoid any adverse public record on your credit reports such as bankruptcy, liens, or wage attachments.

2. Amounts Owed: 30%

The key is to understand what your credit utilization is on a monthly basis. This is basically the proportion of total balances on credit lines to total credit limits for revolving accounts. Your ratio should be at least under 30 percent, but it's best to be under 10 percent.  Don't forget to consider your credit utilization ratios in individual credit cards as well.

3. Length of Credit History: 15%

This essentially means the time since you opened your first credit account. Remember, never close that first credit card unless you're positive it will not dramatically affect the length of your credit history.

4. New Credit: 10%

This includes the amount of recently opened accounts and the number of recent credit inquiries. For those of you with lingering payment problems from the past, the re-establishment of positive payment history is also taken into account.

5. Types of Credit Used: 10%

The FICO model likes to see a number of different types of credit accounts including credit cards, installment loans, mortgages, and/or retail accounts. A healthy mix of credit indicates you are able to responsibly manage various types of credit.


on Tue, 2016-08-02 17:17