The FICO credit score is the most used number to determine how risky you are for a loan from the perspective of a potential lender. The FICO score is a proprietary credit score that was invented by the Fair Isaac Corporation, and it has become the default credit score used by most lenders.
The Fair Isaac Corporation calculates your FICO Score from the loan data in your credit report, and that data can be grouped into five categories: payment history, amount owed, length of credit history, new credit, and the type of credit you use. The percentages in the chart reflect how important each of the categories is in determining your FICO score.
Here is a list of the different categories and some of the types of data that goes into each of them.
- Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
- Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
- Severity of delinquency (how long past due)
- Amount past due on delinquent accounts or collection items
- Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
- Number of past due items on file
- Number of accounts paid as agreed
- Amount owed on your loans and accounts
- Number of accounts with balances
- Percentage of credit lines used (proportion of balances to total credit limits)
- Percentage of installment loan amounts still used
Length of Credit History
- How long accounts have been open
- Time since account activity
- Number of recently opened accounts and proportion of accounts that are recently opened
- Number of recent hard credit inquiries
- Amount of time since recent account openings
- Amount of time since credit inquiries
Types of Credit Used
- Number of various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)
The Fair Isaac Corporation offers a lot of products in addition to purchasing your credit reports with credit scores from all three credit bureaus. At their website, myFICO.com, the company offers one of their best products, Score Watch® which provides daily monitoring of your Equifax Credit Report and weekly monitoring of your FICO® credit score. The service notifies you when you may qualify for better interest rates, delivers alerts when important changes to your credit score and credit report are detected, and shows you key factors affecting your FICO score and how lenders view you. You can even get a 30 day free trial of myFICO’s Score Watch®.