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What is a FICO Score and How is it Determined?

What exactly is a FICO score? What does it mean? A FICO score is the number used to determine someone’s creditworthiness, your credit score. Financial institutions and lenders use this as a guide to determine how much credit they can offer a borrower and at what interest rate. FICO scores can range from 300 to 850, the higher the number the better. Credit scores can be used by landlords, insurance companies, and employers.

Let’s breakdown what makes up a FICO score:

Payment History – 35%

Your payment history is the most important factor of your FICO score and has the most impact. The repayment of past debt is taken into careful consideration. Therefore, one of the best ways to improve or maintain your FICO score is make on-time payments consistently. 

Amount Owed – 30%

The amount that you currently owe to lenders. Your overall credit utilization or the percentage of available credit used vs borrowed is the second most important factor of your FICO score. This area gives a snapshot of your present financial situation.

Length of Credit History – 15%

It’s as simple as it sounds – this is the length of time your credit accounts have been open. The longer your credit history the better - there is more data and payment information for the financial institution or lender to use as a guide.

Credit Mix or Types of Credit Used – 10%

Credit mix is the mix of the different accounts and loans on record. The combination of mortgage loans, auto loans, credit cards, and other types of loans are factored into the mix.

New Credit – 10%

New accounts/loans and the quantity are factored into your FICO score as well. Opening several new credit accounts in a relatively short period of time can send an alert and represent a possible higher risk.


All of these categories are taken into consideration to determine your overall score. It is important to understand your credit score and review your credit report at least once a year. Everyone is entitled to a free copy of their credit report every 12 months from each credit reporting company. Get your free copy of your credit report.