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  • The Building Blocks of Your FICO Score: How They Fit Together

Why are the slices of this pie the sizes they are? Read on.

As we noted in our last post, information from several streams on your credit report goes into calculating your FICO credit score. Before we explain each of them in detail, this post explains how the puzzle pieces are put together to generate that almost-all-important number. Why "almost"? We'll explain in a bit.

First off, let's look at the streams and their relative importance. On average, the typical borrower's FICO score is calculated as follows (and as shown in the pie chart above):

Your payment history is the most important item, accounting for 35 percent of your score. 

The next most important item, weighted at 30 percent, is the amounts you owe your various creditors relative to the total amount you can borrow, or the "percentage utilization" of credit. The lower this ratio, the higher your score.

Coming in third at 15 percent is the length of your credit history, based on the age of your oldest revoiving credit account. (A "revolving" account is one where you free up credit for use again as you pay down your balance.)

The remaining two items each count for 10 percent of your score. One is the types of credit used: more variety is better here as it shows you can manage different types of debt. The other is the number and age of your past credit applications. Numerous recent applications for credit can adversely affect your score.

it will All of these categories of data are factored into your FICO score. The figures above are averages, however, and the weight given to any one of these in determining your score depends on the overall information in your own credit report. Those weights also change over time as your use of credit and debt changes.

Your FICO score is based only on the information contained in your credit report, but lenders may also use other information to make their lending decisions, such as income, how long you've held your current job, or the type of credit you seek.

Both good and bad information are included when calculating your FICO score. Some negative information, such as late payments, can signficantly lower your score quickly, while other negative information may have less of an impact. Rebuilding your score after an adverse event is much like getting back in shape after a sedentary period—it will take time and effort. So-called "credit repair" services that promise quick fixes to your score often cannot deliver on their promises; the best strategy for keeping your score in good shape is to manage your credit responsibly in the first place.