The Five Sections Of Your FICO Score

The five sections that make up your FICO credit score are your payment history, account types, current debts, age and length of your credit history, and the inquiries.  Every section is weighted differently in the formula that calculates the FICO credit score as follows:  35% is your payment history, 30% is your current outstanding debt, 15% is the age of your credit history, is the types of accounts and another 10% is from inquires.

It’s important to understand what’s actually included in the different sections and what is considered bad and good for each one. 

Payment History

This section contains the information regarding how well you have been paying each credit account.  Each lender reports to the credit bureaus about your payment history. 

Every late payment is recorded by the credit bureaus as over 30 days late, over 60 days late, over 90 days late or over 120 days late.  If your account is ever more than six months late, then the lender may charge it off and deem it uncollectible.  A recent late payment has more of an impact than aged late payments.  Therefore, a timely payment on every account is important. 

Current Outstanding Debts

Your FICO credit score is also greatly impacted by the total amount of your current outstanding debt.  This section includes every type of credit that has been extended to you, not just credit cards or mortgages, but also car loans and student loans.  The formula does take into consideration the total amount of credit that was extended to you verses how much you have reported as yet outstanding.  This very special ratio is called credit utilization.  When you have high credit utilization, which means that your outstanding debt is close to your credit lines, then you score will lower.  Therefore, the rule of thumb is that each credit car balance should be kept under 30% of the maximum limit.       

Age and Length of Credit History

The total amount of time that is reported on your credit history is another key part to the formula that determines your FICO credit score.  The longer your credit history, then the more positive this section will be in the total score.  The reason is that the more data available to lenders regarding your payment history, the better that a lender can determine your credit worthiness and their risk of non-payment.  

Types and Numbers of Inquiries

Anytime a company uses your FICO credit score in the decision making process, an inquiry into your credit is made sent to a credit bureau.  The inquiry is then subsequently recorded in your report.  Multiple inquiries processed within a fairly brief timeframe may have a negative impact on your score.  This is very true when they are credit card company inquiries, where few to none is best.  However, it’s good to note that these inquiries only remain on your report and have an impact on your score for two years. 

Account Types

In this section, it’s best to have a mixture of credit cards and various loans.  This is important so that each type of lender may view your payment history for each type of credit.