FICO’s formula takes into account these five factors in calculating your credit score. The percentages in parentheses indicate the weight of the factor in the overall score:
Payment history (35%) – Do you pay your bills on time? Are your payments sometimes late or does your history show a disturbing pattern? Are your payments late by a few days or a few months? Liens, bankruptcy and bills that go to collection are very damaging.
Amount of debt (30%) – This includes both your total debt and how much you owe on particular accounts. How close you are to your credit limit is also important. Lenders are wary of consumers who max out their credit lines.
Age of accounts (15%) – How long ago did you open an account? The older your accounts are, the better. Lenders also look at the average age of all your accounts.
Last credit application (10%) – Opening too many accounts in too short a time can lower your score. Simply applying for credit, which authorizes a creditor to pull your credit history, can, in certain circumstances, cost you points.
Types of credit (10%) – Lenders prefer a mix of installment loans, such as mortgages or car loans, and debt on major credit cards.