FICO Score Factors: The 5 Components and Their Weights

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FICO Score Factors: The 5 Components and Their Weights

The FICO score factors are what you need to keep in mind if you are trying to raise your FICO score. In fact, 90 percent of lending decisions in the United States are based on FICO scores, so it’s essential that you know how the factors affect your FICO score.

Here are the 5 components of a FICO score and how they are weighted.

1. Payment History

Your payment history is 35 percent of your total FICO credit score and is the most important factor. Your past long-term payment history is used to forecast your future behavior.

FICO tracks both revolving loans, such as credit cards, and installment loans such as mortgages and student loans. To improve this component of your FICO score, you need to make timely payments.

2. Credit Utilization

Credit utilization refers to the percentage of available credit and accounts for 30 percent of your total FICO score. To improve your credit utilization, the rule to follow is to make sure that you do not use more than 30 percent of your available credit across individual as well as multiple credit cards.

3. Credit History Length

Your credit history length refers to the length of time that a credit account has been open and the amount of time that has passed since the most recent action on the account. It comprises 15 percent of your total FICO score.

While it is impossible to have a perfect credit score as someone who is new to credit, using credit responsibly with no missed payments and low utilization ratios, will put you on track to a high score.

4. New Credit

New credits accounts make up 10 percent of your total FICO score. However, you should not go out of your way to obtain new credit lines as this could mean that you are in financial trouble.

5. Credit Mix

Credit mix accounts for the final 10 percent of your total FICO score. It refers to the fact that you have a variety of different credit types in your credit report including revolving credit and installment loans. A good credit mix typically represents less financial risks for lenders.