Credit Score Insight

The exact FICO formula is not available to the general public; however, Fair Isaac has disclosed portions of its scoring model. Here’s what we do know. The formula uses mathematical algorithms to evaluate five main categories of your information. 

35% Payment History - How have you paid your account’s over time? Credit accounts that report late payments, charge offs, bankruptcies and judgments have a negative impact, which lowers credit scores.

30% Amounts Owed - Are you maxed out? Accounts with balances reporting greater than 50% of the credit limit will lower your credit scores. Inversely, accounts with balances reporting less than 50% of the credit limit will raise your credit scores.

15% Length of Credit History - Longer credit histories with positive reporting “PAID AS AGREED” increases your credit scores. The FICO scoring formula weighs the age of your oldest accounts against the age of your newest accounts. Therefore, closing out older accounts lowers your average account age and will lower your credit scores.

10% Types of Accounts - Having a mixture of credit accounts on your credit report has a positive impact on overall credit scoring. For example, a mortgage account carries greater weight than an unsecured credit card account.

10%  New Credit - Opening multiple new accounts in a short time period lowers your credit scores because it lowers your average account age. Don’t open new cards that your not going to use; instead, increase your available credit limits on your existing accounts.

Information Not Used In Scoring

FICO foes not use the following information in their scoring models.

• Age & gender

• Race

• Whether you own a home or rent

• Length of time at your current address

• Job or length of employment at your job

• Income

• Education

• Marital status