The Five Factors That Affect Your FICO® Score

How the Five FICO® Factors Work Together

FICO explains that its scores consider five broad categories of credit-report information: payment history, amounts owed, length of credit history, new credit, and credit mix.

The familiar 35%, 30%, 15%, 10%, and 10% figures are general educational weights. They are not a formula that allows a consumer to calculate a score manually or predict that one action will create a specific point increase.

1. Payment History

Payment history shows how credit obligations have been paid over time. FICO identifies it as the largest general category because past repayment behavior can help predict future repayment risk.

Information that may matter

• On-time payments.
• Late payments and how late they became.
• How recently a delinquency occurred.
• How many accounts show missed payments.
• Collections, charge-offs, foreclosures, and bankruptcies.
• Evidence that accounts returned to current status.

2. Amounts Owed

This category considers debt levels and how much of available revolving credit is being used. Owing money does not automatically make someone high risk, but larger balances can affect the likelihood of managing future obligations.

Common elements

• Total balances across accounts.
• Credit-card utilization overall and by individual card.
• Number of accounts carrying balances.
• Amounts owed on installment loans compared with original loan amounts.
• Whether revolving accounts are close to their limits.

Utilization is important, but it is not the only part of the amounts-owed category.

3. Length of Credit History

Length of credit history considers how long accounts have been open and how much experience the credit file reflects.

• Age of the oldest account.
• Age of the newest account.
• Average age of accounts.
• How long specific account types have been established.
• How recently accounts have been used.

4. New Credit

New-credit activity can include recent hard inquiries, newly opened accounts, and the amount of time since those events occurred.

FICO says inquiries remain on credit reports for two years, while FICO® Scores generally consider inquiries from the previous 12 months. Rate-shopping rules may group certain mortgage, auto, or student-loan inquiries made during a focused shopping period.

• Number of recently opened accounts.
• Time since the newest account was opened.
• Recent application-related inquiries.
• Reestablishment of positive history after past payment problems.

5. Credit Mix

Credit mix considers the different types of accounts appearing in the report, such as credit cards, retail accounts, installment loans, mortgages, and finance-company accounts.

You do not need every type of account, and opening unnecessary credit merely to change the mix can create new inquiries, lower average age, and add debt.

Five-Factor Comparison

Why the Same Action Can Affect Two People Differently

A scoring change depends on the entire report before and after the action. For example:

• Paying down a card may matter more when utilization was very high.
• A new inquiry may matter more in a thin or recently opened file.
• One late payment may matter differently in an otherwise clean file than in a file with several delinquencies.
• Closing a card can affect utilization differently depending on remaining limits and balances.

This is why exact point promises are unreliable.

What the Five Factors Do Not Directly Include

FICO® Scores are based on credit-report information. They do not directly include salary, savings balances, employment tenure, home equity, education, race, religion, marital status, or personal character.

Lenders may consider some non-score information separately during underwriting, subject to applicable law.

Which Factor Should You Work on First?

1. Bring essential accounts current when possible.
2. Protect future payment history with reminders and realistic due dates.
3. Reduce high revolving balances without creating new hardship.
4. Review reports for genuine inaccuracies.
5. Limit unnecessary applications.
6. Allow established accounts to age.

The right order depends on cash flow, past-due obligations, upcoming applications, and the information in the report.

Common Five-Factor Mistakes

• Believing the percentages can calculate a personal score.
• Focusing only on utilization while missing late payments.
• Opening unnecessary loans to create “credit mix.”
• Closing old cards without considering utilization and account history.
• Applying repeatedly because inquiries are only 10%.
• Expecting the same score effect for every consumer.
• Ignoring report errors because the score appears acceptable.

Your Five-Factor Review Checklist

1. Review payment history on all reported accounts.
2. Calculate card utilization by account and overall.
3. Identify the oldest, newest, and average account ages.
4. Review hard inquiries and recently opened accounts.
5. List revolving and installment account types.
6. Choose the highest-priority habit based on your actual report.
7. Avoid actions taken only to chase short-term points.
8. Continue to Lesson 3 for a deeper look at payment history.