The 5 Most Important Factors

  1. 35 % – Payment History: Your record of bill paying says a lot about how responsible you are with credit.
  2. 30% – How much you owe: The score looks at the total amount owed on all accounts as well as how much you owe on different types of accounts (mortgage, auto, etc).Using a higher percentage of your limits will worry lenders and hurt your credit score.
  3. 15% – Length of Credit History: Less important than the previous two factors, but it still matters. You can still have a good score with a short history, but typically the longer you’ve had credit, the better.
  4. 10% – Number of Credit Inquiries: Opening new accounts can ding your credit score, particularly if you apply for lots of credit in a short time and you don’t have a long credit history.
  5. 10% – Types of credit: The FICO score wants to see a healthy mix of credit, but they are vague on what this means. They recommend you have a balance of both revolving debts like credit cards and installment loans like auto loans or a mortgage.

Most people are aware of the three credit reporting agencies TransUnion, Equifax and Experian. Although all three bureaus use the FICO scoring model, the actual formula differs slightly from bureau to bureau. That is because the way the bureaus collect and report data isn’t exactly the same.