FICO is the king of credit scores, used in the most lending decisions. So what factors matter most in its scoring formula?
The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.
The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.
If you ever want to buy a house, get a car, rent an apartment, or just not get gouged on your monthly bills, you should probably know your credit score. And the king of credit scores? FICO.
Your FICO score is cooked up using a bunch of fancy calculations and secret formulas, but the part you need to know about is actually pretty simple. It’s made up of five basic factors.
1. Payment history
Your payment history makes up 35 percent of your score, and it’s pretty much what it sounds like: how good you’ve been at repaying debts over the years. If you’re regularly late paying or you’ve defaulted on a big loan, such as a mortgage, that will hurt your score.
2. Credit utilization
Another 30 percent of your score is based on something called credit utilization. This is how much of your available credit you’re actually using. Let’s say you have a credit card with a $10,000 limit, but you’re only using $300 of it. That means your credit utilization is low. Score! … for your credit score.
3. Length of credit history
The length of your credit history makes up another 15 percent of your credit score. The longer your accounts have been open, the better. And if you’re new to credit? Sorry, but that hurts your score.
4. New credit
New credit makes up another 10 percent of the FICO score. But the term is a little misleading, because the goal is to have fewer new accounts. Taking on too much new credit at once makes you look desperate. No one likes desperate.
5. Credit mix
Credit mix makes up the final 10 percent of your FICO score. Lenders want to see that you can handle different types of credit — a car loan, a mortgage, credit cards. Mix it up, and you should be in good shape.
FICO may be king, but when you know how the system works, you’re one step closer to being the ruler of your credit score.