What Your FICO Score Means
When a lender looks at your credit score, they are typically looking at the FICO score. This method of credit scoring is the most widely accepted for lenders and it is the most important credit score for consumers. That leaves many people wondering what the FICO score consists of and how important each aspect of the score is.
Impact of Payment History
If you have recently had trouble paying your bills on time, that is going to greatly affect your credit score. In fact, 35% of your credit score is made up of your credit history. Also, recent payments are weighted more heavily than older payments. That means that if you used to pay your bills on time but now you do not, it will have a more adverse affect on your FICO score than if it were the other way around.
Outstanding Credit Can Lower a Score
An amazing 30% of your credit score is figured by the amount of outstanding credit you have. You can pay your bills and those bills can still have a negative impact just because you owe a large amount of money. Credit card debt is the most harmful to a credit score, and it is important to keep credit card balances low.
Length of Credit History, Credit Loads and Mixture
While your score also depends on the length of time you have had credit, recent credit that has been obtained, and the types of credit you have, these actually have the lowest impact on your overall score. The length of time you have had credit goes into creating 15% of your score, while the other two are 10% each.
The most important aspects of maintaining a good credit score are paying on time and keeping your debt low. If you follow those rules, you should have a FICO credit score that you can be pleased with.
