The Anatomy of a Credit Score

FICO Credit Scores are determined by the following:

Payment history (35%)

This is the most important piece of your credit score. Any negative payment history will have a significant reflection on your score. Paying your bills on time is crucial to your credit score.

Current loans and amount owed on credit cards (30%)

Your balance to limit ratio is the second most important factor that determines your credit score. It is important to keep your balance no more than 30% of your credit limit.

Length of credit history (15%)

The longer you have accounts in good standing the more positive that will be for your credit score. Creditors want to see a history of credit responsibility.

New credit and inquiries (10%)

Opening several new credit accounts within a relatively short amount of time will negatively impact your credit score. Having a large amount of hard inquiries could lower your score.

Type of credit account types (10%)

It is imperative to have a mixed amount of credit accounts. This includes revolving credit such as credit cards; installment credit such as student or auto loans; and open credit such as charge cards that require the balance to be paid in full each month.