There could be something standing between you and your dream car or house: your credit score.

Lenders, like credit unions, banks and credit card companies, use credit scores to evaluate a person's creditworthiness and whether or not they will pay back their debts. The most widely used credit scoring model is the FICO score. FICO, which stands for Fair Isaac Corporation, uses different criteria in your credit report to calculate a score. This data is grouped into five categories, and each category carries a different amount of importance to the overall score. FICO scores range from 300 to 850. Here's how it breaks down:

FICO chart

Payment History (35%)

  • Number of past due items on file
  • Number of accounts paid as agreed
  • How long an account was past due
  • Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, mortgages, etc.)
  • Time since past due items appeared on your report
  • Adverse public records or collections


Amounts Owed (30%)

  • How much you owe on various accounts
  • How much you owe on specific types of accounts
  • Lack of a specific type of balance, in some cases
  • Number of accounts with balances
  • The proportion of balances to total credit limits on certain types of revolving accounts, like credit cards
  • The proportion of balance to original loan amount on certain types of installment loans, like auto or home loans


Length of Credit History (15%)

  • Time since accounts opened
  • Time since accounts opened, by specific type of account
  • Time since account activity


New Credit (10%)

  • Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
  • Number of recent credit inquiries
  • Time since recent account opening(s), by type of account
  • Time since credit inquiry(s)
  •  Re-establishment of positive credit history following past payment problems


Types of Credit Used (10%)

  • Information on the various types of accounts you have (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)

You have three FICO scores, one for each of the three credit bureaus: Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores will change as well. The good news is that FICO scores are only one piece of information lenders look at when determining whether or not to grant you a loan. They also look at income, employment, the amount and the types of credit you are requesting. Making consistent on-time payments will always help raise your FICO credit score. Questions? Email us.