How Is Your FICO Credit Score Calculated?

Here’s a handy little chart we put together to help you understand what information affects your credit score.

Improving the information in any of these categories will have a significant effect on your score.

In general your credit score is made up of your payment history in addition to other factors.  (If you don’t know your current score, click here to get your scores from all 3 bureaus, plus your complete 3-in1 credit file for only $1.)

As you can see from the graphic:

  1. 35% of your credit score is reflective of your payment history. 

    Do you have late payments, charge-offs or the myriad of other damaging information, or are you a “pays as agreed” type.

    If you do have negative, damaging payment history, then addressing those issues, as well as ensuring that you do not rack up more negative information will tremendously help your credit score.

  2. 35% of your score is also comprised of your “Credit Utilization”. 

    Credit Utilization is a ratio that shows how much of the available credit you have that you have already used. 

    For example, if you have 5 credit cards with a limit of $2,000 each, you have $10,000 worth of available credit.  If between those 5 cards, you owe a total of $7,300, you would then be utilizing 73% of your available credit.  

    Having a high Credit Utilization ratio will dramatically decrease your credit score.  At the very minimum you should aim to use no more than 50% of your available balance, on each and every credit card and line of credit, as well as cumulatively.  Closer to 25-30% will be the most beneficial to your credit score.

  3. 15% of your FICO Credit Score is comprised of the length of time you have had credit.

    The FICO score rewards you for not only paying your creditors on time and wisely using your available balances, they also want to make sure that you are a marathon runner and not a sprinter, and thus want to see that you can maintain these good habits over the long run. 

    This is one reason why the young and new credit users find it so difficult to get the best offers.  Sure, they haven’t done anything to damage their credit, but they haven’t proven that they can handle it when they do have it.

  4. 10% of your score looks at whether you have a well rounded portfolio of obligations.

    Major credit card (Visa, MasterCard, American Express) – check; mortgage – check; auto loan – check; department store credit card – check.  Miss any one of these major categories of credit and your score is going to take at least a small hit. 

    Remember, just because you have an open line of credit doesn’t mean you have to use it.  Sometimes, it’s worth having an open line just to fill out your portfolio and boost your available balance for the Credit Utilization ratio.

  5. 10% is also made up of “hard” inquiries.

    Hard inquiries appear on your credit report only when you take an affirmative action to actually secure new credit.  Examples include, when you apply for an auto loan, mortgage or credit card. 

    A “soft” inquiry on the other hand is an inquiry that is not negatively counted against you.  Soft inquiries include, when you pull your own consumer credit report, when your report is reviewed by a company who wants to send you promotional offers (those infamous “You’re Pre-Approved for Our Credit Card” letters you get in the mail) and when your current creditors review your credit file in the normal course of servicing your account. 

    As opposed to “hard” inquiries, “soft” inquiries do not have an impact on your credit score.  On the other hand, “hard” inquiries certainly do.  Too many of this type in a short period of time raises the red flag and says you may be on a credit binge that you may not be able to handle over the long-haul.  The best strategy, make your buying decisions strategically and space them over a decent period of time.

These 5 categories of information determine how your score is calculated.  If you have major issues within any of them your score will surely be negatively impacted.  However, once you pinpoint the areas that you need to address this will give you a guide in which to prioritize your plan of attack.  With perseverance, hard work, and making smart decisions going forward you will begin to see improvements in a short period of time. 

But like any endeavor where the payoff is as significant as fixing your credit score, the effort is worth it.  In fact, read this article to see how much your credit score can be costing you.

If you do have issues on your credt report that are bringing your score down, there is something you can do about it.  Click here to find out about our professional services to help optimize the information that is appearing on your credit report.  Or if you’re the more adventurous type, take our Free Credit Secrets video course here.

We’d love to hear your story.  Be sure to comment below with which category is impacting you the most.

[wp_graphic id=”arrow19″ type=”arrows” align=”center” width=”200px” top=”0px” bottom=”0px” left=”0px” right=”0px”][/wp_graphic]

About Anthony Candella

Anthony is the founder and Directing Attorney of and has been helping consumers just like you understand and improve your credit and financial situation since 2003.