5 factors that affect your FICO credit score

Sixty years ago, a mathematician named Earl Isaac and an engineer named Bill Fair created a credit scoring system. They called it Fair, Isaac and Company. Later it was renamed Fair Isaac Corporation and in 2009, they changed the name again to FICO

Today, FICO works with companies in over 90 countries to make better decisions and mitigate risk through industry-leading analytics software.

Of course, if you’ve ever applied for loan or financing of some type, and received a FICO score, you most likely know who they are.  

One question we get a lot here at Hometown Auto is “What goes into my FICO score?”

FICO scores range from 300-850. The higher the number, the less the risk to the company providing the loan or insurance. It’s important to remember FICO isn’t a credit reporting agency. It get’s your credit information from Equifax, Experian or TransUnion and uses it to create your FICO score. Baked into the score are five main factors. They are:

  • Payment history: FICO look to see if you pay your bills on time.
  • Debt/amount owed: FICO considers how much you owe against how much you can borrow. 
  • Age of credit history: FICO wants to gauge how long you’ve had credit.
  • New credit inquiries: Research shows people who open multiple credit accounts in a short period of time are a higher risk.
  • Types of credit: FICO will look at the mix of credit types like credit cards, retail accounts, loans, etc.

While all these areas are considered in your FICO score, payment history and amount owed contribute the most. 

Equally as important to know is what’s not in your FICO score. Demographic information like race, marital status, religion, age, location or anything covered in the Consumer Credit Protection Act are not considered.

If you have any further questions about FICO scores, please contact us here.