FACTBOX - FICO credit score components
Thu May 10, 2007 5:09PM EDT
Credit scores, dominated by the Fair Isaac Corp.'s FICO system, are relative measures of a person's creditworthiness.
The scores are used by banks and other lenders to determine if a person will get a loan and how much they will pay.
Here are components of the FICO score:
-- Payment history, 35 percent of score. Late payments on credit cards, mortgages, student loans etc. will show up here and reduce the score.
-- Amounts owed, 30 percent of score. Total amount owed on a credit card compared with the total credit line. The higher the amount owed relative to the credit line, the lower the score.
-- Length of credit history, 15 percent. A short credit history will reduce the score. Experian, Equifax and TransUnion have developed VantageScore to reach more people with "thin" credit histories.
--New credit, 10 percent. The more request one makes for new credit accounts, the riskier they are perceived.
--Types of credit used, 10 percent. FICO considers the mix of credit cards, retail accounts and mortgages.
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1 comment:
It is really useful information about FICO system. There are so many components of the FICO!!! I never thought about how hard it is to keep credit history.
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