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FICO Score Calculation

FICO Score Calculation

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Daniel Cohen
UpdatedApr 13, 2015
Key Takeaways:
  • FICO is the leading credit score used by lenders
  • Know YOUR credit score and FICO score, since lenders will know it
  • Make payments on time and keep balances below 30% of credit limits

How do I figure my FICO score?

How do I calculate my FICO score?

The details of credit scoring models used by the major credit bureaus are closely guarded trade secrets, owned by the companies that have developed the scoring models.

The best known and most widely used scoring model, the FICO score, which judges your credit on a scale from 300 to 850, was developed by the Fair Isaac Corp., and is used with slight variations by the three major credit bureaus: TransUnion, Experian, and Equifax. Because the complexity of the statistical analysis used in credit scoring, and the fact that the scoring algorithms are not publicly available, you cannot precisely figure your own credit score. However, Fair Isaac has made public the general criteria it uses in calculating credit score. So based on information in your credit report, you should be able to tell which items in your report are helping or hurting your credit score.

There are five key factors that go into calculating your credit score, with certain items carrying more weight than others. These factors are as follows:

1. Payment history

Payment history counts for approximately 35% of a score. It is the most heavily weighted factor used in calculating your credit score. Consistently paying your bills on time has a positive influence on your score, while late or missed payments will hurt you in this area.

If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts and bankruptcy filings are also taken into consideration when analyzing your payment history.

2. Total debt and total available credit

Total debt and total available credit counts for about 30%. This section looks at how much debt you have compared to the total available credit on your accounts. If all of your accounts are maxed out, you will be considered a poor credit risk, because it appears that you are struggling to pay off the debt you have already incurred.

If your account balances are relatively low compared to your available credit, this part of the risk analysis should help your overall credit score. The score calculation also looks at these two factors independently.

Having too much available credit, whether you have used it or not, could hurt your credit score, as statistical studies have shown that people with excessive amounts of available credit are a higher credit risk. Unfortunately, the bureaus do not define exactly what they consider excessive, so best tip is to use credit conservatively and to keep your debt-to-credit limit ratio low.

3. Length of positive credit history

Length of positive credit history counts for about 15%. The longer you maintain accounts in good standing, the better your score will be. This shows that you are able to make a long-term commitment to a creditor and are consistently responsible about making your payments.

4. Mix of types of credit

Mix of types of credit counts for approximately 10%. Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact.

5. New credit applications

The number of new credit applications you have recently completed accounts for about 10% of your score. Applying for too much new credit in a short time period makes indicates that you could be credit risk, as you may be desperately trying to keep your head above water. The models make an exception for people who are shopping around for a loan, so if you are simply applying to see who can give you the best rate on a new loan, you need not worry too much about damaging your credit score.

While you cannot calculate your own credit score accurately, you can review your credit report on the five factors named above to get an idea of whether the accounts listed on your credit report are hurting or helping your credit score. You can then take action to improve any potential problems, such as paying down your balances or paying off collection items.

Generally speaking, if you are carrying more than $5,000 in credit card debt or are struggling with credit card or revolving debts, you should solve this problem first. Apply for help with one of Bill’s approved debt help partners.

Items not in a FICO score

Factors such as age, sex, income, and length of employment have no direct affect on your credit score, and are not considered when the bureaus calculate your score. Keep in mind that for most lenders, your credit score is only one aspect, albeit an important one, of your overall "credit worthiness," meaning the creditor's view of your ability to repay a loan.

Your income, for example, is not considered in the calculation of your FICO score, but most lenders will ask what you earn to analyze your ability to repay the loan. Even if you have an 800 FICO score, if your income is only $10,000 per year, a lender will probably not loan you a large sum of money, because despite your exemplary credit habits as measured by your FICO score, the lender can see that you probably cannot afford to repay the loan.

Credit score range: What is a good FICO score?

FICO scores range between 300 and 850, with the average U.S. credit score being 723.

According to Fair Isaac, a credit score above 700 places you in the low credit risk category (perfect or "A" credit), meaning you should qualify for the best interest rates, depending on other factors such as income. A score between 690 and 600 is considered a moderate credit score, and many people say you are "Alt-A" if you are between about 650-680. This means that while you will not receive the best interest rates, you should still be able to borrow at reasonable rates.

A score below 600 generally means that you will be considered a relatively high credit risk, and your interest rates will probably be quite a bit higher than a consumer with a better credit score. A score below 550 is generally considered poor credit; a score this low will likely prevent you from obtaining many loans, and those you can obtain will carry high interest rates and fees.

There are other scoring models, such as the Vantage Score , which lenders use when making loan decisions, so the ranges mentioned above are not absolute. However, Fair Isaac is the most common scoring model, so the information I provided should serve a good guide.

There are also non-FICO scores provided by sources such as Credit Karma, Quizzle, or Credit Sesame. These firms offer free scores, but be careful how you use them. They are not FICO scores.

Use scores from these firms as a general guide for whether your credit is improving or not. Don't expect a lender to tell you that your actual FICO scores are the same as the scores the free, "FAKO" scores show.

How to Improve a FICO Score

Here are five steps to improve a credit rating:

  1. Pay your debts on time. Delinquencies harm a credit score.
  2. Keep revolving lines below 25% utilization. Do not "max out" any loans or cards.
  3. Diversify you credit portfolio. If, for example, you have only a Visa, MasterCard, or Discover card, get a department store credit card or card from a gasoline retailer. Make your payments every month.
  4. Don't open a large number of account s in a short time. When creditors pull your credit to judge the your applciation, there is a small negative effect on your score. You mutliply that effect if you apply for a large number of accounts in a small timeframe. Be especially careful about this when Christmas comes around, as you may be lured into opening accounts at stores by some promotional discount. The savings on your holiday purchase may be less important, and more costly in the long-run, than the harm to your credit score.
  5. Pull your credit report and contest any inaccurate information. Follow the dispute procedure to corrected your credit file. Go to the debt self-help center for sample dispute letters. The credit bureaus must follow the rules set forth by Congress in the Fair Credit Reporting Act (FCRA).

If you would like to learn more about credit reports, credit scoring, and what it means to you, I encourage you to explore the wealth of material offered by the credit information page.

I hope this information helps you Find. Learn. Save.




LLouise, Jun, 2013
My husband was in charge of paying bills. Only problem is I trusted him and everything is in my name. When I found out he wasn't and I took over I realized my % of onetime payments on FICO score is really bad. What is the history length of on time payments and what is a way to improve my % of on-time payments? I've been paying bills on-time for the last year. I was thinking of using my unused personal CC and paying on time.
BBill, Jun, 2013
It is difficult to answer your question without knowing more about your situation. See the article Short Sale, Foreclosure & Your Credit Score to see how the time to credit score recovery varies with different types of financial missteps. Please ask follow-up questions you may have on that page.
I had several negative items removed from my credit. 1) A tax lien that was paid, 2) A credit account that was in collections that was proven not to be my account, 3) A small medical bill that was paid in full. As a result of these then my outstanding balances were also reduced. I did NOT hire a company to remove these charges. My credit scores went down. How is this possible??
BBill, Feb, 2012
Four questions for you to help better understand your situation: 1. Exactly which credit score are you looking at? There are two: • FICO (range 300 to 850) • Vantage Score (range 501 to 990) • From which credit reporting agency are you getting your scores? There are three: • Experian • Equifax • TransUnion • What was your starting score? • What is your current score?

One tricky item is the credit reporting agencies call FICO scores different names, even though the scoring software is the same. Here are the brand names we found for a FICO score:

• Advanced Risk Score • Pinnacle • Precision • Beacon • Empirica

Please reply with your four answers below.

DDeb, Jan, 2012
I am an authorized user on several of my mother's accounts. Her accounts are very close to maxing out. If I remove myself from these accounts how will this effect my score (I've been on these accounts for several years about 9-10 years)?
BBill, Jan, 2012
Authorized user accounts do not necessarily affect your score. How your score will be affected, if you have yourself taken off your Mom's accounts, depends on whether those accounts were affecting your score to start. If they were being counted towards your score, then what else will remain on your report, once those accounts are removed, will be the key to determining your score. You should work to have at least three active tradelines in your own name, that you keep in good standing.