What makes up my credit score?

An individual’s FICO score is made up of five factors. The first and largest factor is based on payment history. Payment history consists of 35% of the credit score, and it is more heavily weighted toward the most recent pay history. This means that your pay history is going to be more positively or negatively impacted by the last 12 months of pay history, versus pay history further out than that.

Approximate credit weight for each year:

• 40% = 0-12 months

• 30% = 13-24 months

• 20% = 25-36 months

• 10% = 37+ months

The next largest factor is the amount of capacity you have available on revolving lines of credit and credit cards. Capacity makes up 30% of your FICO score. When discussing capacity, I am referring to the availability you have on revolving lines. If you have a $1000 credit card limit and have spent $200 on it, you have 80% availability on that card and it is a good thing. If you have spent $800 of the $1000 limit on your credit card, you will only have 20% availability left and have used 80% of your capacity, which will negatively impact your credit score.

The last three factors are much simpler, but together make up the remaining 35% of your FICO score. One is the length of time you have had credit. It takes time to gain credit, and this time is a 15% portion of the credit report. Unfortunately, this is not exactly fair to young adults who have not borrowed before and have zero credit. On the bright side, at URW, our lending specialists will offer a share secured loan to help you build a credit history. After roughly six months, we will offer a credit card to boost capacity and to keep building history.

Following credit length is your accumulation of debt in the past 12-18 months, which is 10%. This also includes your number of inquiries. Inquiries are any time you apply for credit, whether it be a personal loan, mortgage, auto loan, credit card, or a line-of-credit.

The last 10% is a mix of credit. This mix of credit is between installment loans that raises your credit and revolving that lowers your credit. Keep in mind, the revolving only lowers your credit if it is excessive and you use a majority of your capacity on credit cards. Using secondary finance companies also reduces your credit score as well.

I hope that this information has been beneficial to you and has helped you better understand what actually makes up your FICO credit score. Understanding how your FICO score works is the first step to improving your overall score. For questions and more detailed examples regarding your score, stop by one of our branches and ask to see a lending specialist to break down your credit report with you.

Zachary Potojecki