Tuesday, March 8, 2011

What makes up your credit score?

If you are in the market to buy a home one ver important component of your interest rate is your FICO score.
How are FICO scores determined.
Answer:
The formula itself is complicated and the FICO company (Fair Isaac Corp) keeps it secret. But here are the basic components:
  • A.   35%   Past Delinquencies
    Your payment history
  • B.   30%   Debt Ratio
    Your revolving account balances divided by their limits, as a percentage
  • C.   15%   Average Age of File
    Length of your account history
  • D.   10%   Mix of Credit
    Mix of account types on your report
  • E.   10%   Inquiries
    # times you applied for credit in the last 12 months