Understanding the FICO Model

Understanding your FICO Score and how its calculated

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

Your FICO Scores consider both positive and negative information in your credit report. Late payments will lower your FICO Scores, but establishing or re-establishing a good track record of making payments on time will raise your score.

FICO Score Breakdown

FICO has recently posted five percentage categories on what’s most important when figuring a credit score.

FICO Score Breakdown Category and Credit Grades Payment History: 35%
Length of Credit History: 15%
Amount Owed: 30%
Types of Credit: 10%
New Credit: 10%


Here’s a short synopsis of each category and what it means to you.

Payment History – Notice that this category holds the most weight. It looks at late payments. Thirty days late is not as significant as 60 to 90 days late. It also looks at the last time the payment was late—the more time that passes, the better. They also consider how many times a payment has been late. Let’s say you’ve made 56 payments on time, with only one of them being late — that has less impact than if you’ve made 56 payments and 12 of them were late.


Length of Credit History – While the percentage is on the lower end of the scale, it still matters. They are looking to see when you first started using credit, the number of accounts and how long you’ve had them. If you’ve just started using credit, it’s possible to still get a good credit score, but everything else has to be positive.


Amount Owed – If there are high balances or credit cards have been maxed out, the credit scoring formula figures that it is a greater risk and the credit score will be lowered. One side note here: Closing a credit card account that currently has an outstanding balance can actually HURT your credit score.


Types of Credit – This is one of the areas of confusion because the scoring models do not reveal what “mix” of credit helps or hurts a credit score. What I do know is that they are looking for auto loans, the number of mortgages, installment loans and credit card accounts, and whether those are “balanced” versus having 5 car loans and no credit cards.


New Credit – Opening new accounts is not a bad thing, but it may hurt a credit score if a person applies for a lot of credit in a short period of time. They look at how many accounts were applied for. How many new accounts were opened and over what time period the new accounts were opened. Inquiries (meaning if you were shopping for a competitive rate for a car loan and talked with 5 banks) do not have as much impact as if you applied for 5 different credit cards.

Credit Card Payoff Calculators

How Can I Payoff My Credit Card Debt Sooner?

This credit card payoff calculator will tell you how long it will take you to pay off your credit card debt with the amount you pay now, and how much you would have to pay every month to eliminate credit card debt even sooner.

Paying off Credit Card Debt with Minimum Payments

This calculator is designed to show you how long it will take to pay off your credit card and how much interest you will pay if you only make the minimum monthly payment.


If you have more questions about how your Credit Score can affect your ability to

Get a Mortgage with Village Mortgage,

Call any of our Mortgage Experts at 800.685.5243.


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