FICO Score Calculation Categories

Oct 13, 2025 by wbrum.org 94 views

Introduction to FICO Scores

FICO scores are widely used by lenders to evaluate an individual's creditworthiness and determine the likelihood of repaying debts on time. The FICO score is calculated based on various factors, which are categorized into different sections. In this article, we will delve into the details of FICO score calculations, exploring the different categories and their respective percentages.

FICO Score Calculation Categories

The FICO score is calculated based on five categories, each contributing a specific percentage to the overall score. These categories are:

Payment History (35%): This category accounts for the largest percentage of the FICO score. It assesses an individual's history of making payments on time, including credit card payments, loans, and other debt obligations.
Amount Owed (30%): This category evaluates the amount of debt an individual has, including credit card balances, loan amounts, and other debt obligations. It also considers the proportion of debt to available credit.
Length of Credit History (15%): This category assesses the length of an individual's credit history, including the age of their oldest account, the average age of all accounts, and the length of time since accounts were opened or closed.
Credit Mix (10%): This category evaluates the diversity of an individual's credit accounts, including credit cards, loans, and other types of credit. It also considers the proportion of different types of credit to the total amount of credit.
New Credit (10%): This category assesses an individual's recent credit behavior, including new accounts, inquiries, and credit applications.

Payment History Calculation

The payment history category accounts for 35% of the FICO score. It is calculated based on the following factors:

Payment history on accounts: This factor assesses an individual's history of making payments on time, including credit card payments, loans, and other debt obligations.
Public records: This factor considers any public records, such as bankruptcies, foreclosures, or tax liens, that may have been filed against an individual.
Inquiries: This factor evaluates the number of inquiries made on an individual's credit report, which can indicate a higher risk of default.

Amount Owed Calculation

The amount owed category accounts for 30% of the FICO score. It is calculated based on the following factors:

Credit utilization ratio: This factor evaluates the proportion of debt to available credit, including credit card balances and loan amounts.
Total debt: This factor considers the total amount of debt an individual has, including credit card balances, loan amounts, and other debt obligations.
Debt-to-income ratio: This factor evaluates the proportion of debt payments to income, which can indicate a higher risk of default.

Length of Credit History Calculation

The length of credit history category accounts for 15% of the FICO score. It is calculated based on the following factors:

Age of oldest account: This factor evaluates the age of the oldest account, which can indicate a longer credit history.
Average age of all accounts: This factor considers the average age of all accounts, which can indicate a longer credit history.
Length of time since accounts were opened or closed: This factor evaluates the length of time since accounts were opened or closed, which can indicate a longer credit history.

Credit Mix Calculation

The credit mix category accounts for 10% of the FICO score. It is calculated based on the following factors:

Diversity of credit accounts: This factor evaluates the diversity of credit accounts, including credit cards, loans, and other types of credit.
Proportion of different types of credit: This factor considers the proportion of different types of credit to the total amount of credit.

New Credit Calculation

The new credit category accounts for 10% of the FICO score. It is calculated based on the following factors:

New accounts: This factor evaluates the number of new accounts opened, which can indicate a higher risk of default.
Inquiries: This factor considers the number of inquiries made on an individual's credit report, which can indicate a higher risk of default.
Credit applications: This factor evaluates the number of credit applications made, which can indicate a higher risk of default.

Conclusion

In conclusion, the FICO score is calculated based on five categories, each contributing a specific percentage to the overall score. Understanding the FICO score calculation categories and their respective percentages can help individuals improve their credit scores and increase their chances of being approved for loans and credit cards. By maintaining a good payment history, keeping credit utilization ratios low, and avoiding new credit inquiries, individuals can improve their FICO scores and enjoy better financial opportunities.

Frequently Asked Questions

What is a good FICO score? A good FICO score is typically considered to be 700 or higher. However, the exact definition of a good FICO score can vary depending on the lender and the type of credit being applied for.
How can I improve my FICO score? Improving your FICO score requires maintaining a good payment history, keeping credit utilization ratios low, and avoiding new credit inquiries. You can also consider paying off debt, reducing credit utilization ratios, and monitoring your credit report for errors.
What is the difference between a FICO score and a credit score? A FICO score and a credit score are both used to evaluate an individual's creditworthiness. However, a FICO score is specifically calculated by the Fair Isaac Corporation (FICO), while a credit score can be calculated by various credit scoring models.

References

FICO. (2022). FICO Score Guide.
Experian. (2022). Credit Score Guide.
TransUnion. (2022). Credit Score Guide.