Five FICO Score Factors You Need to Know

Written by: Mary Royston, Marketing & Communications Manager, Callahan & Associates, Inc.


Many people lack knowledge about their credit scores, arguably the single most influential number in their lives. In fact, forty-nine percent of 1,013 consumers polled do not understand that credit scores measure credit risk, according to a 2005 survey by the Consumer Federation of America and Fair Isaac Corp., the company that created the most widely used credit score formula called FICO®.

What makes up your FICO® score?

1) Payment History: 35%
This category includes payment history information about several different types of accounts such as credit cards, retail accounts and installment loans. Many factors are considered including number of past due items on file, amount past due on delinquent accounts or collection items and severity of delinquency (i.e. how long past due).

    In determining your score, weights are assigned to each year of an individual’s payment history:
  • 40% - Most recent 12 months
  • 30% - Prior 12 to 24 months
  • 20% - Prior 24 to 36 months
  • 10% - Prior 36 to 48 months
  • 0% - Older than 4 years

2) Capacity (Amount You Owe): 30%
The FICO® scoring model weighs capacity heavily because it knows that the majority of Americans who go bankrupt charge up their cards to the limits before they file.2

    The FICO® model considers three separate components of an individual's credit when assigning capacity points:
  • Installment balances compared to the original loan amounts.
  • Revolving account balance compared to an individual's revolving credit limit on an account-by-account basis.
  • Total revolving account balances compared to an individual's total revolving limits.

It is in your best interest to keep balances low on all revolving credit and pay off debt within open accounts instead of closing accounts and consolidating it into one or two accounts with higher balances.

3) Length of Credit History: 15%
Even if you no longer want an older account, you should think twice about closing it. Lenders are looking for borrowers with long credit histories. Also, if you have new credit you should be cautious about opening many accounts. Rapid account buildup may look risky because of uncertainty in handling the credit.1

Hard inquiries, or requests from creditors for a copy of a report, are tracked on the credit report for 24 months. But, only the inquiries from the most recent 12 months are included in the FICO® score calculation. If you would like to opt out of pre-approved credit offers, you may do so at

4) Types of Credit: 10%
This category looks at the overall mix of credit such as credit cards, mortgages or consumer finance accounts. You should try to balance the mix but are advised not to open new credit accounts for balancing purposes unless necessary. It is unlikely that adding accounts will improve their credit scores.

5) Types of Credit: 10%
Approximately 10% of your credit score is based on how many recent new accounts you have established.

    This factor reviews:
  • Number of accounts
  • Length of accounts
  • Recent requests for credit report
  • Length of time since credit report inquiries were made by potential lenders

You should do all of your rate shopping in a two-week period since you can inquire an unlimited amount of times and it will only count once in that time frame. Also note that if you check your credit scores by going directly to the credit reporting agency, it will not affect your credit.1

2 Your Credit Score. Liz Pulliam Weston, Prentice Hall Publishing, Upper Saddle River, NJ, 2005.
3 and