Your credit score is what lenders use when making decisions about you, so it's really important. There are several different credit scoring models, but FICO is the one used most often. Most lenders use FICO scores, so it is the one you'll want to focus on.

Your FICO score is a number that is calculated based on your credit history. It ranges from 300-850, with higher scores being better. And FICO, the company behind the score, isn't secretive about the factors that go into calculating yours.

FICO Credit Score Factors

credit score factors
Here are the general components that make up your FICO score. Note that each factor has a percentage that reflects how important it is in the calculation of your score.

  • Payment History: 35%
    Your payment history is the most important factor when it comes to your credit score. This means that the best thing you can do to build or maintain good credit is pay all of your bills on time and in full.
  • Amounts Owed: 30%
    There are several things FICO considers in this category. These include the overall amount you owe on all credit accounts and what you owe on specific accounts. A big part of this is your credit utilization ratio, or the amount of your balance compared to your credit limit on a credit card. The common rule of thumb is that you need to keep your credit utilization ratio below 30% or it will start to hurt your credit rating.
  • Length of Credit History: 15%
    This category includes: how long you have had credit accounts, how often you have used them, and the average age of all of them. So, generally speaking, a longer credit history is better for your FICO score. However, a short credit history doesn't automatically mean your credit score is bad, as this only accounts for 15% of your rating.
  • Credit Mix in Use: 10%
    Lenders want to see you demonstrate an ability to manage different types of credit accounts. So, try to maintain a healthy mix of both installment (loans, mortgage) and revolving (credit cards, retail cards) credit accounts.
  • New Credit: 10%
    Opening many credit accounts in a short period of time is a red flag for lenders. That type of behavior signals financial trouble, so don’t open too many accounts at once.

What Isn't Factored Into Your Credit Score

Despite what you may read or hear, the following information will not be factored into your FICO score.

  • Age
  • Race
  • Religion
  • National Origin
  • Marital Status
  • Income
  • Occupation
  • Employment History
  • Where You Live
  • Child/Family Support Obligations
  • Whether or Not You've Participated in a Credit Counseling Program

The Bottom Line

Your FICO score is what most lenders will look at when making decisions about you, and bad credit can make it more difficult to get approved.

If you are dealing with credit issues and need to get approved for auto financing, Auto Credit Express is here to help. We have a nationwide network of car dealerships that are trained in special finance. This means they have the lenders and know-how to help people in all types of credit situations.

Our service is free, fast and puts you under no obligation to buy anything. See what we can do for you by filling out our car loan request today.