How your FICO score is Calculated

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There is a 3-digit number that impacts your financial health, otherwise known as your FICO score. Do you know how your FICO scored is calculated? Well, it is based on data found in your credit report that comes from the following credit bureaus: ExperianEquifax, or TransUnion

The FICO score is what creditors use to predict how likely a borrower is to repay their debts.

FICO is short for Fair Isaac Corp and typically scores range from 300 to 850, take a look at the break-down below:

Exceptional is 800 or better

Very good ranges from 740 to 799

Good ranges from 670 to 739

Fair ranges from 580 to 669

Poor credit is anything 579 or below 

Though, what qualifies credit as poor or exceptional? The FICO Credit Score is based on five distinct factors, and you must have an active credit card that has been open for at least six months in order to have a score. Take a look at my post on building credit as a millennial woman if you need help establishing credit. Additionally, when you subscribe to the money multiplied newsletter you will receive a guide to building credit, which also includes a glossary of credit terms you need to know!

There are five factors that make up your FICO score and certain factors are more important than others. Nonetheless, they all come together to determine your FICO score.

Payment history (35%)

The first thing a lender will look into before extending any line of credit is going to be your payment history. This provides insight into the type of borrower you are and is a pretty good indicator of how likely you are to pay back any debts. There are different types of accounts creditors recognize for payment history. Accounts like credit cards, store cards, installment loans, and mortgage loans. Your payment history is the biggest factor for determining your credit score as it accounts for 35% of your FICO score. 

Amounts owed (30%)

The second largest portion of your FICO score is made up of the amount you owe. This percentage consists of the debt you carry in total. Simply having debt doesn’t mean you’re a high-risk borrower. Though, creditors will look at your credit utilization to determine whether or not you are overextending your line of credit. Having high utilization and not paying your credit card off each month might mean you’re less likely to make timely payments. 

Length of your credit history (15%)

You’ve heard the saying, “great things take time” and the same is true with your credit score. The longer you’ve had an account open typically the better your score becomes over time. Start with a secure credit card or see if a family member is willing to make you an authorized user on your credit card. When you do open up a credit card, don’t close it. The amount of time you’ve had the card open accounts for 15% of your credit history.

Credit mix (10%)

The different types of credit you have is referred to as your credit mix. Examples of this are store cards, credit cards, which are also known as revolving accounts. Instalment loans (mortgage loan, auto loan, student loan). The purpose of this is to show lenders that you’re capable of managing a variety of different types of credit.

New credit (10%)

Do not open multiple lines of credit within a short period of time, this looks risky! This is especially true if you’ve been managing credit for a short amount of time. The newer the account the more it impacts your overall credits average age!

For a FICO score, you need at least one active credit account for at least six months that reports to the major credit bureaus. Late payments will lower your FICO score but establishing or re-establishing a good track record of making payments on time will raise your credit score.



  1. February 26, 2021 / 1:18 am

    Super informative post! I think it’s so important that everyone understands how credit is made up. As a college student, I have quite a few friends who don’t understand how it works or how to build their credit scores. This blog post is definitely a step in the right direction for any person to get started with understanding credit

    • terrikingpr
      February 26, 2021 / 1:21 am

      I’m so glad, you found this post informative!