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Below is a detailed breakdown of each category. As you review this information, keep in mind that:
- FICO® Scores take into consideration all of these categories, not just one or two.
- The importance of any factor (piece of information) depends on the information in your entire credit report.
- FICO® Scores look only at the credit-related information on a credit report.
- FICO® Scores consider both positive and negative information on a credit report.
- Payment History
Approximately 35% of a FICO® Score is based on this information, which includes:
- Payment information on many types of accounts:
- Credit cards – such as Visa, MasterCard, American Express and Discover.
- Retail accounts – credit from stores where you do business, such as department store credit cards.
- Installment loans – loans where you make regular payment amounts, such as car loans and mortgage loans.
- Finance company accounts.
- Public record and collection items – reports of events such as bankruptcies, foreclosures, lawsuits, wage attachments, liens and judgments.
- Details on late or missed payments (“delinquencies”) and public record and collection items.
- The number of accounts that show no late payments or are currently paid as agreed.
- The Amounts You Owe
Approximately 30% of a FICO® Score is based on information which evaluates
indebtedness. In this category, FICO® Scores consider:
- The amount owed on all accounts.
- The amount owed on different types of accounts.
- The balances owed on certain types of accounts.
- The number of accounts which carry a balance.
- How much of the total credit line is being used on credit cards and other revolving credit accounts.
- How much is still owed on installment loan accounts, compared with the original loan amounts.
Credit utilization, one of the most important factors evaluated in this category, considers
the amount you owe compared to how much credit you have available. For example, if you have a $2,000 balance on one card and a $3,000 balance on another, and each card has a $5,000 limit, your credit utilization rate would be 50%. While lenders determine how much credit they are willing to provide, you control how much you use. FICO’s research shows that people using a high percentage of their available credit limits are more likely to have trouble making some payments now or in the near future, compared to people using a lower level of credit. Having credit accounts with an outstanding balance does not necessarily mean you are a high-risk borrower with a low FICO® Score. A long history of demonstrating consistent payments on credit accounts is a good way to show lenders you can responsibly manage additional credit.
- Length of Credit History
Approximately 15% of a FICO® Score is based on this information. In general, a longer credit history will increase a FICO® Score, all else being equal.
However, even people who have not been using credit long can get a good FICO® Score, depending on what their credit report says about their payment history and amounts owed. Regarding length of history, a FICO® Score considers:
- How long credit accounts have been established. A FICO® Score can consider the age of the oldest account, the age of the newest account and the average age of all accounts.
- How long specific credit accounts have been established.
- How long it has been since you used certain accounts.
- New Credit
Approximately 10% of a FICO® Score is based on this information.
FICO’s research shows that opening several credit accounts in a short period of time represents greater risk-especially for people who do not have a long credit history. In this category a FICO® Score considers:
- How many new accounts have been opened.
- How long it has been since a new account was opened.
- How many recent requests for credit have been made, as indicated by inquiries to the consumer reporting agencies.
- Length of time since inquiries from credit applications were made by lenders.
- Whether there is a good recent credit history, following any past payment problems. Looking for an auto, mortgage or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. In general, FICO® Scores compensate for this shopping behavior in the following ways:
- FICO® Scores ignore auto, mortgage, and student loan inquiries made in the 30 days prior to scoring. So, consumers who apply for a loan within 30 days, theinquiries will not affect the score while rate shopping.
- After 30 days, FICO® Scores typically count inquiries of the same type (i.e., auto, mortgage or student loan) that fall within a typical shopping period as just one inquiry when determining your score.
- Types of Credit in Use
Approximately 10% of a FICO® Score is based on this information. FICO® Scores consider the mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. It is not necessary to have one of each, and it is not a good idea to open a credit account you do not intend to use. In this category a FICO®
- What kinds of credit accounts are on the credit report? Whether there is experience with both revolving (credit cards) and installment (fixed loan amount and payment) accounts, or has the credit experience been limited to only one type?
- How many accounts of each type exist? A FICO® Score also looks at the total number of accounts established. For different credit profiles, how many is too many will vary depending on the overall credit picture.