Hi all, I was reading a book by Jean Chatzky and in one she told how the fico credit scores are figured out.
- 35% is based on how well you pay your bills so be on time
- 30% is balance and burden, a measure of how much credit you have and how much is being used. So use only 20 to 30% of what you have available. To figure this out use divide money used (credit debt) by the total available to you and this gives you the percentage. Or maybe this will help: 5000 / 1000 = 0.50 or 50%.
- 10% is based on search for new credit- how recently you’ve opened or inquired about new accounts. things like credit cards count as one search per each application. Things like car loans and mortgages checked on in a 2 week period count as one each no matter how many times it’s done.
- 10% is financial composition of your file: what percentage is bank-card debt and what percentage is installment debt.
- 15% is a measure of the length of your credit relationships. For this keep one card that is more than 2 years old.
hope this helps. I found it to be helpful understanding what makes up the final score.