There are many types of credit scores, but lenders only care about your FICO score, so let’s examine how FICO scores are determined.
There are 5 factors that go into your FICO score.
1. Past Delinquencies – makes up 35% of score
- Timing of the delinquency – more recent lates affect scores more
- Level of Delinquency – 60 days late is worse than 30, etc
- Last activity date
- Missed payments (low vs. high) – total number
2. Revolving Debt Ratio – makes up 30% of your score
- Credit limit divided by credit balance – the lower the better
3. Average Age of file – makes up 15% of your score
- The older the better
4. Mix of credit – makes up 10% of your score
- Ratio of credit cards to loans
5. Inquiries – make up 10% of score
- Only hard inquiries affect your score. A hard inquiry is recorded whenever you apply for credit
