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What Really Determines Your Credit Score?

Posted by Brittany Carr on Thursday, March 30th, 2017 at 10:15am.

Written by Robert H. Ruth

This is a topic I discuss with borrowers most every day, so I thought you’d like to know the components of your credit score.  According to Fair Issac Corporation (FICO), “the score is calculated from many different pieces of data in your credit report, and the data is grouped into the 5 categories below.” Here they are with the approximate weighting assigned to each category:


  • Payment History : 35%
  • Amounts Owed :  30%
  • Length of Credit History:15%
  • New accounts Opened :10%
  • Mix of Credit :10%
  • Total: 100%

Let’s see what each category represents:

Payment history: 35%

This tells whether you have paid your credit card accounts on time in the past.  If you make all your payments on time each month, this will be a positive for your score. If you do not pay your accounts when due, are habitually late, or miss paying for a month or so this will be a big negative factor on your credit score. The credit score uses payment histories for credit card debts, retail store charge accounts, installment loans (like car loans or student loans and mortgages). The thing I always tell borrowers is the manner in which you pay your debts is the best determinant of how well you will pay your mortgage loan. That is why this is weighted the highest .

Amounts Owed : 30%

FICO uses what they call a “credit utilization ratio” on revolving charge accounts (accounts that do not have to be paid in full within 30 days). This is determined by dividing your current balances owed into the total amount of credit available for all accounts. So if you have total available credit of $65,000 and your current outstanding balances on your accounts is $28,000, you have used up 43% of the revolving credit available to you. If your balances total $ 16,000, you have only used 24.6% of the revolving credit available to you, so you would have a better ratio in this area. If you are close to maxing out your credit cards you will not score as well as someone who does not have high balances. The point here is that if you use your credit carefully, and make the payments on time you will be rewarded in your credit score.

Length of Credit History: 15%

According to FICO, your score takes into account :

  • How long your accounts have been established, including a factor for your oldest and newest accounts, and an average age of your accounts
  • How long specific credit accounts have been established
  • How long it has been since you used certain accounts

New Accounts Opened: 10%

FICO factors in how you shop for credit and how many new accounts have been opened. It is important not to open several new accounts in a short period of time, because newer accounts lower your average account age, which impacts your score. FICO also reports on recent inquiries, which are when a lender or bank makes a request for your credit score. These recent requests are important because they might indicate that you are shopping for credit. Even the instant charge you open at a department store to get a 10-15% discount on a purchase will result in a credit inquiry by the department store, so be careful when considering opening a new account.

Credit Mix in Use: 10%

FICO scores will consider your mix of credit cards, retail charges, installment loans, finance company accounts and mortgage loans. If you pay your bills in a timely fashion the mix is not that important, but if you do not have a great amount of credit you may be seen as a greater credit risk. It is important that you have experience with both revolving charge accounts and installment loans.

If you want to learn more about credit scoring, a great resource is myFICO, the source for much of the information I have shared in this article. Their web site is :  www.myfico.com


Robert H. Ruth
Senior Mortgage Banker
Direct: 401.789.4441
Mobile: 401.743.4364
Email: rhr11@icloud.com
NMLS ID: 513243

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