FICO Scores are calculated using many different pieces of credit data in your credit report. There are five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
Payment History
- Points are gained for regular on-time payments
- Points are gained for a greater number of accounts showing no late payments
- Significant points are lost due to recent late payments
- Significant points are lost due to reported collections or public records – judgments, foreclosures, suits, wage attachments, liens, and bankruptcies
Balances
- Points are gained as balances on all loans and credit cards are reduced
- Points are gained as the number of accounts with balances are reduced
- Significant points are lost when balances approach credit limits on credit cards
Length of credit
- Points are gained for credit histories established for a longer period of time. This takes into account the age of your oldest account, the age of your newest account, and the average age of all of our accounts
New credit/Inquiries – (Inquiries are instances when your credit has been checked)
- Points can be lost when "hard" inquiries are made (Hard inquiries are credit checks that are initiated because of credit applications)
- Even though inquiries can remain your credit history for a 2-year period, they will have no effect after 1 year
Types of credit
- Points are gained if our credit history shows experience with both revolving (credit cards, etc.) and installment (car loans, etc.) accounts
- Points can be lost for having too many accounts of each type. This varies depending upon your overall credit picture
- Significant points are lost due to reported collections or public records – judgments, foreclosures, suits, wage attachments, liens, and bankruptcies