How Credit Scores Are Calculated


Different information on your credit report carries differing weights that makes up your credit score. Below is a list of how certain factors effects and makes up your FICO credit score. The Vantage scoring system is slightly different.

1. How you pay your bills is 35 percent of the score.
The most important factor is how you have paid your bills in the past, placing the most emphasis on recent activity. Paying all your bills on time is good but paying them late on a consistent basis is bad. Having accounts that were sent to collections is even worse. Declaring bankruptcy is the worst.

2. Amount of money you owe and the amount of available credit is 30 percent of the score.
This factor is your outstanding debt and how much money you owe on your credit cards, car loans, mortgages, home equity lines, etc. Also considered is the total amount of credit you have available (Try to keep your credit cards balances at less than 50% of your total credit line).

3. Length of credit history is 15 percent of the score.
The longer you've had credit, particularly if it is with the same credit issuers, the more points you will obtain.

4. Having a mix of credit is 10 percent of the score.
The best credit scores will have a mix of both revolving credit, such as credit cards, and installment credit, such as mortgages and car loans.

5. New credit applications is 10 percent of the score.
This factors in your interest in new credit such as how many credit applications you are filling out. The do however, compensate for people who are rate shopping for the best mortgage or car loan rates. The only time this really hurts your score is when you have had recent credit problems, such as late payments or bills sent to collections.

The factors below has no effect on how your credit score is calculated.

1. age
2. race
3. sex
4. job or length of employment at your job
5. income
6. education
7. marital status
8. whether you've been turned down for credit
9. length of time at your current address
10. whether you own a home or rent

You may also want to read What is a good FICO credit score

You may also want to read What is the difference between Vantage and Fico Credit Scores

Although all information has been written in good faith and reviewed, please email us at [email protected] to report any inaccuracies.