FICO Score Calculation

To figure out your credit score you need to understand the basics behind the FICO score calculation.  This is a complex formula that takes into account information from your credit report to generate a three digit number.  There are five main area of the FICO score calculation and each has a different wieght.

The first 35% of the FICO score calculation is your payment history.  This looks at how well you do paying your bills on time.  This is the largest part of the FICO score calculation and looks specifically at any late payments you might have.  It looks how frequent you pay late, how late were you in paying, and how long has it been since you have paid late.

The next 30% of the FICO score calculation is how much you owe.  This is found by dividing your balances by your credit limits.  This is done with each account and you also have a total utilization.

The next 15% of the FICO score calculation is your credit history.  This looks at the average age of all your accounts and the age of your oldest account.  The longer the history the better.

The next 10% of the FICO score calculation is your applications for credit.  This looks at your credit report to see how many times you have applied for new credit.

The last 10% of the FICO score calculation is your credit mix.  This looks at all your accounts to see what types of credit you are using.  People want to achieve a healthy mix of credit.

This is just a general overview of the FICO score calculation because the exact formula is not divulged to the public.  Also, the sub factors in each part interact with each other and create a high level of complexity.

If this still has you wondering what you can do to improve or what is a good credit score, you now have a basic understand of how the FICO score calculation works.  This will help you think about your life and the different things that will effect it.

Also, check out how to get a free online FICO score.

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24 Responses to “FICO Score Calculation”

  1. Kim

    You should have used “affect.” (This will help you think about your life and the different things that will effect it.)

    October 16th, 2010

  2. Tom Becker

    Its time we start to question a system that can’t even be explained. Businesses and employers, almost anyone wants to decide a persons worth by a number on a page. Yet we can’t find out where that number comes from? Is this even constitutional. We have a right to face our accuser in this case a formula that won’t be divulged. And whats our recourse? Individuals can spend uncounted number of hours and money to correct the error and improve the scores. Guilty until enough money and frustration proves our innocence. Come on America, lets all wake up.

    October 31st, 2010

  3. Tom Becker

    Just what I’m saying you immediatly assume there is something wrong with MY life, the point is this score tells you NOTHING about me. So don’t come off all righteous and tell me to think about my life

    November 1st, 2010

  4. David

    SO why won’t these companies publish an actual formula?

    May 11th, 2011

  5. The FICO score formula isn’t published because it is a propitiatory information. And this is how they make their money. They own the idea and have no need to share it with anyone. The other reason is that they feel if you knew how it was calculated there would be some gaming of the system to produce high FICO scores by consumers.

    June 1st, 2011

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