What Does FICO Use in Calculating My Credit Score?

The Fair Isaac and Company, FICO, uses a number of indices to compute your score. There are basically five indices FICO uses to calculate a score based on your financial activities. They are: your payment history, amounts you owe, length of your credit history and types of accounts used.

Your payment history is a major decider of what your score will be. This is because it makes up 35 percent of your total score. In grading your performance in this aspect, bureaus look at the number of accounts you paid as agreed to creditors, collections, and delinquencies such as late payments.

The amounts you owe is another big piece of the pie. It accounts for 30 percent of your score. This means your payment history and the amounts you owe together account for about two-thirds of your score. That is 65 percent. What the bureaus want to see in this aspect are: how much you owe and the type of accounts, amounts you owe on installment accounts in relation to their balances, number of zero balances, and how much of your revolving credit lines you have used.

The length of your history is another factor the bureaus consider in generating your score. They use the length of time since accounts were opened, the length of time since the last activity, the duration of good financial activity. All of these account for 15 percent of your total score.

The type of credit used is another decider on what your final score is. The bureaus take use the total number of accounts and the types of credits you have to compute your scores. This makes 10 percent of your score.

New accounts make up the final 10 percent of your score. The number of new accounts and inquiries, duration since the last opened account and inquiries are all used to compute this 10 percent.