FICO is just one of the providers of credit scoring models. Therefore, it is important to note that other credit scoring models may use other variable categories.
Let’s consider, for a minute, some questions relating to each of the factors and the approximate weight given to each category.
- Payment history: What is your track record? Have your payments been made on time? (35%)
- Outstanding debt: How much do you owe? Do you have a high level of debt, that is, are you near the maximum on some or all of your credit limits? (30%)
- Credit history: What is the length of your credit history? That is, how long have you had credit? (The longer the better.) (15%)
- Pursuit of new credit: Does your credit report indicate that you have made numerous applications for new credit and are potentially taking on more debt? (10%)
- Types of credit in use: Does your credit report show a “healthy” mix of credit types in use? The score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans. It is important to note, however, that it is not necessary to have one of each, nor is it a good idea to open credit accounts that you do not intend to use. (10%)
