The Five Things That Count
Listed below are five main categories of information on a credit report that Fair Isaac & Co evaluate, along with their general level of importance. Within these categories is a complete list of the information that goes into a FICO score. Please note that: • A score takes into consideration all these categories of information, not just one or two. No one piece of information or factor will determine your score.
• The importance of any factor depends on the overall information on your credit report.
• Your score only looks at information on your credit report. Your FICO score does not reflect your income
• Your score considers both positive and negative information in your credit report.
• Your score does not consider your ethnic group, religion, gender, marital status and nationality.
The score itself can range from 300 to 900. The formula for exactly how the score is calculated is proprietary information and owned by Fair Isaac. Here is an approximate breakdown of how it is determined:
1. 35% of the score is based on your payment history. One of the primary reasons a lender wants to see your score is to find out if and how timely you pay your bills.
2. 30% of the score is based on outstanding debt. How much do you owe on your loans? How many credit cards? Are they at their limits? A good rule is to keep your cards at 30% or less of their limits.
3. 15% of the score is based on the length of credit history. More information about your past payment history gives a more accurate prediction of your future actions.
4. 10% of the score is based on the number of inquiries. These may be bad for your score because they indicate that you may be in some kind of financial trouble or may be taking on a lot of debt. FICO scores only count inquiries from the past year.
5. 10% of the score is based on the types of credit you currently have. What kind and how many of each? The credit mix usually won’t be a key factor in determining your score- but it will be more important if the report lacks other information on which to base the score.
You can have access to your credit report using Equifax
