If your credit report lists several recently opened accounts, your score will likely take a hit and lenders are more likely to view you as a risky borrower. When calculating scores, bureaus also look at the age of your new credit. For example, if you only have revolving lines of credit, like credit cards, consider applying for a small personal loan and making on-time payments.

Improve this area of your credit profile by reviewing your credit report and identifying any gaps in credit types. While you can’t go back in time and open credit accounts sooner, you can strengthen this portion of your score by keeping your oldest accounts open and in good standing.Ĭredit mix is the combination of accounts you have in your credit report, including both revolving lines of credit and installment loans. Even though the length of your credit history only accounts for 15% of your score calculation, it can be a frustrating metric to manage-especially if you’re building credit for the first time. In general, the longer your credit history, the higher your score. For that reason, making more than the minimum payment each month and paying down debts quickly can improve your credit score. As the second most important element of your credit score, it accounts for 30% of the calculation. The amounts owed category represents the total outstanding balances on all of your accounts-or how much money you owe. To improve your credit score-or keep it strong-make consistent, on-time payments on all of your accounts. This metric includes several factors like the number and severity of late payments and the presence of adverse public records like lawsuits and bankruptcies. Here’s what impacts your FICO Score.Īccounting for 35% of your credit score calculation, payment history is the most impactful component of your credit score. In general, FICO scores are calculated based on five major factors, each with its own weight. While FICO Score 8 is still the most widely used version, the majority of auto lending scenarios use FICO Auto Scores, and mortgage lending typically uses FICO Scores 2, 4 and 5. In addition to FICO’s base scores-FICO Score 8 and FICO Score 9-the company has a number of industry-specific versions, including for mortgages and auto lending. Specific criteria and considerations vary slightly, however, depending on the type of FICO Score. Using this data, FICO scores are calculated based on five general metrics: payment history, amount owed, length of credit history, credit mix and new credit. That said, lenders typically view FICO scores above 670 as good while the official FICO scale classifies scores between 670 and 740 as “Good.” How the FICO Score WorksįICO scores are calculated based on information collected by the three main credit bureaus-Experian, Equifax and TransUnion-and summarized in a consumer’s credit report. What is considered a good FICO Score depends on the lender or creditor evaluating a consumer’s credit profile. Borrowers with higher scores have higher approval odds and greater access to competitive rates.

Credit score range to buy a car