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What Comprises My FICO Credit Card Score?

There are three credit bureaus, Equifax, Trans Union, and Experian that create and maintain computer databases on individuals’ credit. Each of these bureaus uses a FICO score, which is a three digit number between 300 and 850, to rate an individual’s creditworthiness. The higher the score, the more credit worthy, the lower the score the less credit worthy. Each credit bureau has their own equation to determine the FICO score, which means individuals’ credit scores might be a little different from each credit bureau. Credit scores may vary from bureau to bureau because different bureaus may have more or less information on you as well. Because of this it is very important to check out your credit reports, all three, in order to see what your FICO score is on all three. And while you will never know the equation that is used to comprise your FICO score, you can have a basic idea of how it is created.

FICO Score

Payment History
Your payment history, in other words how you make monthly payments, if you are ever late or always on time, generally makes up around 35% of your FICO score. As a result, it is important to make your monthly payments on time every time. As you can see, if you miss even one monthly payment it can impact your credit score significantly. So, make sure you pay your monthly payments on time to keep your FICO score on the up and up.

Credit History
Another 15% or thereabouts is made up of your credit history, or how long you have had credit. This is important because it shows lenders how you handle your credit over a long period of time, rather than just the past 6 months. Many people make the mistake of closing down a lot of their accounts in order to have only one account. However, this is a mistake because you are closing down part of your credit history, which can lower your score rather than increase it like you imagined.

Debt to Credit Ratio
Know that you know what makes up 50% of your ratio, you should consider that your debt to credit ratio makes up a whopping 30% of your FICO score. Basically this means that the amount of money, or debt, you have charged on your credit card compared to the credit limit you have available. This is your debt to credit ratio. So, the less balance you carry on your credit cards the lower your debt to credit ratio and the higher your FICO score.

Very Recent History
Another 10% of your FICO score is comprised of your very recent credit history, or else how you have been handling your credit responsibilities within the last few months. So, if you have bad credit and start making on time payments then you can see a quick improvement in your FICO score because of this. Also, your very recent history will impact potential mortgage or card lenders decisions.

Credit Analysis
A final 10% of your FICO score is comprised of an analysis regarding other types of credit you have. This includes installment loans, mortgages, leases, or other types of credit the individual might have.

While your credit score is more or less determined by these percentages, the equations used by the credit bureaus are slightly different, but include these elements more or less. So, as long as you keep these elements in mind and work at increasing your credit score you can do so. However, you should get a copy of your FICO score from each credit bureau to see where you stand.

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