You hear a lot about your credit score being a strong factor behind your eligibility for credit cards, car loans or mortgages, but do you know how the Fair Isaac Corp., the company that calculates your FICO credit score, determines this number?
Here are the basics:
Your FICO credit score ranges from 300 to 850 points; the higher your score the better.
A high FICO score means you’ll get the best rates and terms on all kinds of loans.
You’ll also save a bundle on expenses like auto insurance and life insurance.
The 5 factors that determine your FICO score
Under Fair Isaac’s credit scoring model, your FICO score is based on five primary factors:
35% of your FICO score is based on your payment history
30% of your FICO score is based on the amount of credit you have used
15% of your FICO score is based on the length of your credit history
10% of yourFICO score is based on your mix of credit and income
10% of your FICO score is based on inquiries and new credit you’ve taken on
All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.