FICO Scores – Explained

In Misc, Personal, Tips N Tricks on December 7, 2006 at 9:29 pm

You’ve been there and I’ve been there. We all watch our credit history as much as we watch our bank accounts. True? One of the main components of the credit history is the FICO score, you know that.

FICO stands for Fair Isaac Corporation. The credit scores are calculated based on the FICO algorithm/formula. The exact formulae is a top secret and is not available to the public. But the Fair Isaac company has disclosed how much percent they give weightage to the influential factors. Here are they,

  • 35% – Punctuality of payment in the past (only includes payments later than 30 days past due)
  • 30% – The amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
  • 15% – Length of credit history
  • 10% – Types of credit used (installment, revolving, consumer finance)
  • 10% – Recent search for credit and/or amount of credit obtained recently

Well, that gives us an idea of what to watch for if you are to maintain a good credit score.


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