Finally, it is important to note that you have more than one credit score – each agency generates
a score, and they may differ from each other, sometimes significantly. In addition, an agency
generates different scores for different kinds of users, and the score it sells to you may be
another different score called an “educational score.”
What goes into FICO scores?
The actual way the FICO scores (and other scores) are calculated is considered a business secret.
But we do know generally what makes up FICO Scores.^36
FIGURE 2: WHAT GOES INTO FICO SCORES?
10%10%
35%
Payment history
Amounts owed
Length of credit history
15% New credit
Types of credit used30%Payment history tracks whether you are paying your bills on time and as agreed. This is the
biggest factor in your FICO Scores. Paying bills late, not paying bills at all, and having bills that
go to collections will cause your scores to drop. The older this information is, the less impact it
has on your scores. This is the reason is it more important to stay current with active accounts
than it is to pay off old debts. Debts that have gone to collections have already damaged your
scores.
(^36) Pie chart values are from FICO. See http://www.myfico.com.