One of the biggest financial mysteries out there is how credit scores are calculated.  Here’s a breakdown of how the information on your credit report is used to generate your FICO score.


Payment History – 35%

Whether or not you’re making your payments on time is the single largest consideration that goes into your score.


Amounts Owed – 30%

In addition to the total amount owed, the credit bureaus also examine the total number of credit accounts with open balances and the proportion of what’s owed compared to the credit limit or original balance of each account.


Length of Credit History – 15%

How long has each of your credit accounts been open?


New Credit – 10%

The credit bureaus examine the total number of recently opened accounts; the proportion of total accounts that have been recently opened; and the number of recent credit inquiries.


Types of Credit – 10%

They also consider what types of accounts (i.e. credit cards, mortgages, installment loans, retail accounts, etc.) and how many of each you have open.


It is important to note that your FICO score takes into consideration all of these categories, not just one or two.  Additionally, the importance of any one factor can vary from person to person, depending on your credit profile.  And don’t forget that lenders base their credit decision on much more than just your credit score, also taking into consideration such factors as your income, time with your current employer, and the type of credit you’re requesting.