Your FICO Score

June 10, 2009

Your FICO score is the credit score used by 90 percent of the lenders in the United States to determine whether or not they want to lend you money. A FICO score is a three digit number that runs from 300 to 850. The higher your credit score, the better your chances are for loan approval—and the better terms and conditions are for the loan.

Calculating FICO Scores

Now that you know what a FICO score is you’re probably wondering how it’s calculated. The FICO score breakdown looks like this:

Payment history (35%): Making your payments and making your payments on time.

Balances (30%): The more manageable levels your outstanding balances are, the better off your credit score is.

Credit History (15%): The length of your credit relationships are important. The longer your relationships with credit card companies, mortgage lenders, auto loan providers and more, the better.

Credit Types (10%): Your credit score is also determined by the various types of credit you have. High credit scores come from having various types of credit such as mortgages, credit cards, student loans, car loans and more. It’s about your ability to manage different types of credit so if you only have a credit card then it doesn’t speak to your ability to manage various types of debt.

New Credit (10%): The final portion of the FICO score credit calculation is establishing new credit. You can tackle two portions of your credit score at once by applying for new credit that is a type of credit you don’t have.

Good FICO Scores vs. Bad Scores

With the current credit crunch in full swing, what used to be considered a good credit score (in the 700s) may now be considered low by lenders since they’re more risk averse.

  • Good credit scores are those 750 and higher
  • Mediocre credit scores range from 650-749
  • Scores from 300-649 are considered bad credit

How can you find out your FICO score?  Experian, which is one of three three major credit agencies teamed up with FICO, so you can request your score at the Experian site or MyFICO. Be sure you check into the ways you can get a free credit report.

Improving Your FICO Score

If your FICO score is low, concentrate on improving your credit score by concentrating on the five areas that factor into the score. First, make sure you always make your payments and make them on time. Second, pay down or pay off debt so that it’s at a reasonable amount for your income level.

Do not close old accounts because you don’t use them anymore; keeping them open can help boost your credit. Also be sure to establish new credit once in awhile to keep your credit file fresh and mix it up a little by making sure that the credit you have is diversified.

Now that you know what your FICO score is and how important it is for obtaining credit approval be sure to take the necessary steps to maintain or improve your credit score. Especially in a credit crunch, your FICO score may make a difference between getting approved for a loan or getting denied.


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Kristie Lorette is a personal finance writer who spent over eight years working in the real estate, mortgage and credit industries.

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7 Responses to Your FICO Score

  • Gordon's Credit Report

    Some FICO score websites alert you every time after a particular period is passed, which help you to remain up-to-date about your FICO Score.

  • marci is one of those free FICO score places.
    I use it to watch my numbers 🙂
    They also send me a reminder every 3 months to check in.
    A good way to keep track of things.


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