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Factors That Affect Your Score

Many lenders use a FICO® score — a numeric calculation of your credit report calculated by Fair Isaac Corporation — to obtain a fast, objective measure of your credit risk. By understanding the factors that can help or hurt your score, you'll have a better understanding of how lenders view you as a credit risk — and how you can improve your score.
Here are the five factors that determine your FICO score. The levels of importance shown here are for the general population, and will be different for each individual:
  1. Your payment history: what is your track record? (approximately 35% of your score)
    The most significant impact on your score is whether you have paid past accounts in a timely manner (on or before the date the payment was due). However, an overall good credit profile can outweigh a few late payments, and late payments have less impact over time.
  2. Amounts that you owe: how much is too much? (30%)
    Part of the science of credit scoring is determining how much debt is too much:
    • In some cases, having a very small balance without missing payments shows you've managed credit responsibly, and may be slightly better than having no balance at all.
    • While you don't want to have too many accounts open, it's good to have more than one, so that you're not using too much of one account's available credit limit.
    • Owing a lot of money on numerous accounts suggests to lenders that you may be overextended and more likely to make late payments — or make no payments at all.
  3. Length of your credit history: how established is it? (15%)
    In general, a more seasoned credit history will increase your FICO score. Lenders want to see that you can responsibly manage your credit accounts over time. However, even those people who have not used credit for an extended period of time may get high scores, depending on how the other information in their credit report appears.
  4. New credit: are you taking on more debt? (10%)
    Opening several credit accounts in a short period of time can represent a greater risk, especially for those with newer credit histories. According to Fair Isaac Corporation, FICO scores try to distinguish between an attempt to obtain many new credit accounts and an attempt to obtain the best interest rate. FICO scores generally do not associate higher risk with shopping for the best interest rate.
  5. Types of credit in use: is it a "healthy" mix? (10%)
    Your FICO score will reflect your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans, etc. While a healthy mix will improve your score, it's not necessary to have one of each, and it's not a good idea to open accounts you don't intend to use.
What does not affect your score
Lenders look at many things when making a credit decision, including your income, employment history, and the kind of credit you're requesting. But none of those factors are included in your FICO score. And neither the lender nor your score considers your race, religion, sex, marital status, age, or if you receive public assistance.
FICO scores also ignore self-inquiries, so checking your own credit report will not lower your credit score. In fact, it's a good idea to check your credit report once a year to make sure there are no mistakes.
Certain information provided by Fair Isaac Corporation, San Rafael, California.