July 27, 2009
What is FICO Score?
FICO Score is calculated statstically with information from consumer’s credit files. FICO score ranges from 300-850.
Almost all financial institutions use FICO score to determine your credit worthiness.
How is Credit Score determine? While the actual calculation of FICO Score is proprietary information, we do know what information is used to calculate the FICO Score.
Payment History is 35%
The best indicator is how you’ve paid your bills in the past. Late payments, bankruptcies, collections all affect payment history.
Debt Level/Amount Owned is 30%
The amount of debt you have compared with the overal credit limit is your credit utilization. The higher your credit utilization the lower your score.
Length of Credit History is 15%
Longer credit history will increase your credit score
Type of Credit Usage is 10%
Having different types of credit improves your credit score. Mortgage, Student Loans, Credit Card debt, Store Credit debit, etc.
New Credit/Inquiries are 10%
Too many inquiries will affect your credit score negatively.
