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How FICO® Credit Scores Work

The higher your FICO® scores the less you can expect to pay for your loan. For example, on a $216,000 30-year, fixed-rate mortgage:

760 - 850 5.24% $1,192        700 - 759 5.47% $1,222       680 - 699 5.64% $1,246
660 - 679 5.86% $1,275        640 - 659 6.29% $1,335       620 - 639 6.83% $1,413

As you can see in this example using today’s national rates, a person with a FICO® score of 760 or better will pay $221 less per month for a $216,000 30-year, fixed-rate mortgage than a person with a FICO® score of 620 – that’s a savings of $2,652 per year. You can see how essential improving your credit scores can be if they are low, and also how important it is to keep them high if they are good.

What’s In Your FICO® Score

FICO® Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your FICO® score

These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.

Payment History

1) Account payment information on specific types of accounts (credit cards, retail accounts, installment    loans, finance company accounts, mortgage, etc.)
2) Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
3) Severity of delinquency (how long past due)
4) Amount past due on delinquent accounts or collection items
5) Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
6) Number of past due items on file
7) Number of accounts paid as agreed

Amounts Owed

1) Amount owing on accounts
2) Amount owing on specific types of accounts
3) Lack of a specific type of balance, in some cases
4) Number of accounts with balances
5) Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts)
6) Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History

1) Time since accounts opened
2) Time since accounts opened, by specific type of account
3) Time since account activity

New Credit

1) Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
2) Number of recent credit inquiries
3) Time since recent account opening(s), by type of account
4) Time since credit inquiry(s)
5) Re-establishment of positive credit history following past payment problems

Types of Credit Used

Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)

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