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How the FICO Credit Score is Calculated


In this article we’ll take a look at exactly how your FICO score is calculated, and what constitutes a good (and bad) credit score. We’ll also answer a few common credit score questions and finally give some suggestions on things you could do to improve your credit score.

How is my FICO Score Computed?

Your FICO Score is computed using all of the following things:
Fico Score Explained
(Photo from www.MyFICO.com)

What is a FICO score?

A FICO score is a credit score that was developed by Fair Isaac and Company. Lenders use this number in part to decide whether or not to give you a loan. Most lenders offer different interest rates to you depending on how high or low your score is.

Your FICO score:

All FICO scores range from 300-850. The higher your score is, the more likely you are to get a loan. The lower your score is, the less likely you are to get a loan.

If you have a low FICO score and you do manage to get approved for credit then your interest rate will be much higher than someone who had a good FICO score and borrowed money. So, basically, having a high FICO score can save you hundreds, if not thousands of dollars over the life of your mortgage, auto loan, or credit card.

What is considered a good (or bad) FICO score?

How can I check my FICO score?

You can check your FICO score by paying to see it at any of the three credit bureaus, or you can check your FICO score for all three bureaus at once by going here.

If you are planning to apply for a credit card, or especially a mortgage or auto loan then it is vital that you know your score before applying. Every time you request a loan it can lower your FICO score, so you need to know where you are starting from before you apply for credit.

How can I raise my FICO score?

There are several simple ways to raise your FICO score:

Pay all of your bills on time, every time. This includes your utility bills, mortgage and auto payments, and all of your revolving lines of credit like credit cards.

Check your credit report at least once a year – You can find out how to get your free credit reports here. Then, you should dispute any negative information you find. (Read: How to remove negative information from your credit reports)

Do not charge more than 30% of the available balance on any of your credit cards. Banks like to see a nice record of on-time payments, and several credit cards that are not maxed-out. If you are carrying high balances on your credit cards, then make paying them down under 30% a priority.

Do use your credit cards – Many people who make mistakes with their credit believe that the best way to fix things is to never use credit again. If you are afraid that you cannot handle your credit cards correctly then the best policy is probably this one: Run only your utility bills on your credit cards each month, and then pay the balance in full by the due date. This ensures that your utility bills get paid on time automatically, and as long as you keep the habit of paying off your credit card balance each month your score will continue to go up. Leave the credit cards locked in a safe or drawer at home.

Keep your accounts open as long as possible – Even if you are no longer charging on the card. The best policy is to keep those unused accounts open, blow the dust off your card every few months to make a small purchase, then pay it off. How long each of your accounts have been active is a major factor in your credit score.

Remember that it will take time – Following the above steps consistently over a long period of time will repair your FICO score and allow you to qualify for better loans and interest rates. Repairing your FICO score does not happen overnight though, so if you do these things for a few months and do not see a large increase in your score, do not give up. They are all habits that you will want to maintain throughout your life to be sure that you keep your finances and lines of credit under control.

Andy L
July 6, 2008 @ 5:03 pm

My aunt has an outstanding doctor bill that is past due. The account for this bill is in her name only. Without my approval, she told the office manager at the doctor’s office to start sending me the bill for payment. I have not made any payments, and have not signed any agreements to pay this bill, even though the bills are now being sent to my address. The bill is now past due and will be sent to a collection agency, since it is delinquent. Will non-payment of this bill affect my fico score? If so, what do I need to do to clear this up?

Thank you for your advice.

Andy L.

    nobodys at home
    April 6, 2016 @ 6:18 am

    Contact then via certified mail, and tell them you are not a responsible party for this bill, and ask why they beleive you are responsible for the payment, and tdemand they provide you with evidence that at any point you agreed to be a responsible party.

    Then state that if they continue to send you bills to which you are not responsible – that you will contact the authorities ( State Attorney General, Medical Licencing boards, Federal trade commission. ) Also note that sending a bill via U.S. Postal Service, may constitute mail fraud on their part, a Federal Offense. I

    f they do not stop sending the bills – or send to collections – Repeat with the bill collector, Tell them you are not a party to this bill, and demand they provide proof of your responsibility. Threaten ( not an idle threat ) to report them for violations of the Debt Collections laws, and you may take possible other civil actions if they continue.

    The State and Federal laws are on your side, but your going to have to know them, and your going to have to use them. Above all else. EVERYTHING should be done ONLY in writing. Demand that they do NOT call you, but respond to everything via Certified Mail – and you do likewise. Phones are a problem, as they may have recording devices – and – they can twist or lead / control conversations. They are experts in this. With everything in writing, you can calmly evaluate and stick to the non emotional facts. They can not be as effective in intimation, and everything can be used against them, unlike a phone call and subsequent “notes”, or claims they may make. If they do call – refer them back to the Demand letter that all communications take place via U.S. Mail with proof of delivery. Then hang up. Refuse to discuss it over the phone.
    Be Firm. Stand your ground. Stay calm, and learn the law. Use the power of the State and Federal Government agencies that govern such behavior.

Steve Crowder
July 13, 2008 @ 2:06 pm

I work in the credit card business and I have read your information on how the FICO score is computed. Good information but too bad that more people don’t get it. There are many credit counselors out there telling people to close out most, if not all, of their credit cards to protect their credit? I am seeing people closing out multiple accounts with wonderful credit histories that go back several years. It would seem that most of these so called credit experts are actually handing out advice that is directly counter to your information and can harm their believers. Is there any entity that monitors or certifies these credit counselling services?

July 18, 2008 @ 1:29 pm

I have a FICO score of 824. I have credit card debt totalling 27,000. I would like to get a personal loan for 30,000(I found a good offer with a low rate and no pre payment penalties) and pay it all off. I would not get rid of my cards but I wouldn’t use them either. Will paying these off hurt my score?

July 18, 2008 @ 7:36 pm

I have a credit card account with a credit line of 20K that I opened with a 0% balance transfer for 15 months. I just paid off the card with another balance transfer offer with similar terms and will be paying off the loan by the time the 0% interest ends. I have an excellent credit and have a couple of other credit cards with no preset spending limit that I use regularly but never carry a balance.

My questions:

1.) Should I close my first balance transfer account which now has no balance?

2.) Should I close my second account once the balance has been paid off?

3.) I have a couple of Visa/MasterCard type of charge cards that have very small credit lines and do not intend on ever using them. Should I close them out?

4.) I have several store cards that I opened only to take advantage of their initial purchase discounts (i.e. JC Penney, Old Navy, etc.) and do not typically use them–I want to close the accounts so I can take advantage of discounts by opening new accounts after 6 months if I choose to. Should I close out the accounts?

Thank you in advance for your reply.


July 18, 2008 @ 10:47 pm

Christine and Ben,

Thank you for your questions. We will answer them next week. One on Monday, and one on Wednesday, so check back!

August 19, 2008 @ 2:02 am


I had opened up a new credit card with the hopes of transferring a balance, unfortunately, the new credit card gave me a very small credit limit. Would it be detrimental to my credit score to open up another credit card so I can proceed with a balance transfer? Or will I be dinged hard for opening 2 credit cards in a 6 month period and if so, will this affect my APR on my current credit cards?

Thank you so much for your time and your informative website!

With sincerity,

August 29, 2008 @ 11:04 pm


I have a couple of credit cards that I have been 30 days past due on. This is just because I’m a little tight strap for cash right now. One of my options is to enter a prepayment plan with the credit card company, I am willing to do it but will this hurt my credit score? What effect that this have on my credit history? Please advise.


October 24, 2008 @ 2:41 pm

I have a 780 credit score, a couple years ago, when the market was good, we purchased some properties, we’ve had great difficulties renting them and keeping them rented , one has been empty for a full year and i cannot afford it anymore so we handed it to a company to try to get it to short-sale if that doesn’t work give it back to the bank, meanwhile i wont be paying for it. i have another 5 mortgages all up to date a car lease and various cards, will not paying on this property affect my credit so bad that it will bring down my score under 675???

mike gusler
November 6, 2008 @ 6:25 pm

how does the credit cards credit to balance ratios effect FICO scores

Cheryl Spencer
November 30, 2008 @ 7:31 pm

what interest rate can I expect to be charged with a FICO score of 717-720?

January 12, 2009 @ 8:30 pm

I have been rebuilding my credit and recently have been approved for cards with limits much higher than the high annual rate HSBC cards that I qualified for 2 years ago. Now these cards are dragging down my score, but since they are my oldest continual tradeline shown on the big 3, I do not want to close them. Is there a good card with that someone can qualify for a $5-10k line with a FICO of 708?

March 11, 2009 @ 7:06 pm

I used to have good credit but when I purchased my home my score went down some, though I was on time…recently I was having a hard time paying my home loan because my husband’s business was not doing well to be able to pay the mortgage (he pays though I am the only person on the loan) so we fell behind however we recently qualified for a loan modification (which the only way we could get them to help us is to be deliquent on the mortgage) but now my credit score is in the mid 500’s…all of my other credit cards are on time though they all raised the interest rate on me so my only option to go back to my original low rate is to opt out (forced to close cards) so in about a year we will be debt free with all close credit cards…however I want to start working on my credit score…will my lender reverse the deliquents on my credit now that it is added to the new loan…also will getting a secured loan/credit card now though I have good credit card history help bring up my score?

April 18, 2009 @ 9:26 pm

I am a AMEX Green Card holder for the past 14 years and have never failed to pay the balance each month. About 16 months ago, I also became an AMEX Blue card holder with a $10,000.00 limit. I did not use this card until this past December and have a balance of about $1000.00. While I have not paid the balance off each month, the few payments I have had to make have been on time and more than the minimum. I do plan to pay if off over the next couple of months. However, I just received a letter from AMEX advising me that my $10,000.00 limit has been reduced to $1400.00. My question is this–Since lowering the limit makes it appear that I have almost maxed the card out–how does this affect my credit score (my most recent score was 738),wouldn’t this have a negative affect on my credit?

June 17, 2009 @ 9:21 am


i have a truck loan that is 48 pmts in…without incident ( always on time) however this month i wasnt able to make the pmt until the 30 th day…past due . iknow when things are more than 30 days past due, they are reported. seeing i made it, and it was posted that day as pd, do they still report as late even though it was paid on the 30th day past due and not after??? if it does go on my credit score,…..what kind of drop is it gonna feel score/ point wise??? will i be able to recover from this, seeing im never late on any bills?


November 14, 2009 @ 9:39 pm

I’ve been reading about the importance of paying utility bills on time and the afffect they have on FICO scores. I have all three of my credit reports, and nowhere are my utility payments mentioned. Are these companies required to report to credit agencies, or is this at their discretion. I ask because this would raise my FICO score considerably having never been late in years. Thank you, Jane

    November 14, 2009 @ 10:42 pm

    depends on your utilities – some do, some do not. But you can bet that if you are 60 days late they will report you.

November 19, 2009 @ 10:54 pm

I have 11 credit cards all have 0 balances. Will my FICO score drop if I close 1 account every six months?

February 17, 2011 @ 4:05 pm

How can I determine my FICO score without paying a company for the information?

    February 17, 2011 @ 5:25 pm

    you can simply apply for credit (auto loan etc) and you will be told your score by the person getting you approved.

February 23, 2012 @ 5:09 pm

This article does NOT ANSWER THE QUESTION OF HOW A CREDIT SCORE IS COMPUTED! It explains WHAT PER CENT OF A FICO SCORE IS BASED IN, BUT NOT HOW A SCORE GETS COMPUTED! Does FICO start at “0” and work up? At 1000 and work down? How can the score be proved that its based on OBJECTIVE CRITERIA if the “starting point” of a score is NOT DETAILED!


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