How is the credit score determined

What Is a FICO Score and How Is It Determined?

If you've been looking at your credit report lately, you may be wondering what a FICO score is. Let's take a look at what it is and see how these scores are determined.

It actually takes quite a bit of different data to calculate your FICO score that you see on your Credit Report, so let's take a look at the five categories that are used in determining your score. There's 5 different criteria that FICO scores use in their algorithm, so let's take a look at each one.

Before we continue, you should note that FICO uses all of these in their scores, not just one or two.

Types of Credit: The accounts you have used for Credit. These can be from Credit Cards, Loans, Financial accounts and even Retail credit. If you're using credit, then that account would be considered here.

Amounts Owed: The amounts you owe on the accounts, as well as the amount you owe for a specific type of account. The number of accounts that have balances, credit lines used, installment loan amounts that you still

owe and, in some cases, the lack of a specific type of balance.

New Credit: The number of recently opened accounts, number of recent inquiries (you can see these on your reports) and the time since those inquiries. The time since you opened those recent accounts.

Length of Credit History: The time since the accounts were opened, including by specific type of that account, as well as the time since the account had activity.

Payment History: The payment information on specific types of accounts, such as Credit Cards, Installment loans, mortgages, retail accounts, financial accounts and others. The amount past due on delinquent accounts or collection items, as well as the severity of delinquency (past due). The number of items that are past due and the number of accounts that are paid as agreed, too. Having adverse public records, such as bankruptcy, judgements, suits, liens, wage attachments, etc.

I hope that this article helps explain what a FICO score is and how FICO comes up with these scores. Always keep an eye on your credit and do your best to keep it clean! If you have any questions, suggestions or tips, please post below!


Category: Credit

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