What Goes Into Your Credit Score

You know that your FICO score (a.k.a. your credit score) is important. You also know that there are several factors that contribute to your credit score. The formula used for figuring a FICO score is complicated, and does include a variety of factors. But there are some basic ballpark figures as to how much certain events in your credit history affect your credit score.

The recipe for a credit score

Even though there are some pretty complex formulas at work for determining your FICO score, you can get an idea of how important some items are in the grand scheme of credit. Here's a look:

Payment history. This is the most important ingredient in your credit score recipe. It accounts for roughly a little more than 1/3 (35 percent) of your FICO score. This includes things like on time payments for your loans and credit cards. And, if you have a landlord who reports such things, or medical bills, your payment history on these items of "creditworthiness" may also be considered.

How much debt you have right now. At 30 percent of your credit score, this is another big chunk of the FICO score recipe. How much outstanding debt you have (on credit cards, car loans, department store loans, payday loans -- anything really) in relation to how much money you make is a big consideration. This item is also influenced by how much of your available credit you are actually taking up.

Length of credit history. This is where the factors start to have a bit lower impact. How long you have had credit accounts for about 15 percent of your credit score. My parents co-signed on a car for me when I was 18. I have had a credit history for nearly 10 years now. The longer your credit history, the better.

Credit inquiries. Have you opened a credit account lately (this includes credit cards)? Have you applied for a credit account lately (even if its just at the appliance store)? 10 percent of your FICO score is dependent upon whether you have opened new accounts in the last six months, as well as how many accounts you have attempted to open. The more inquiries the worse it is for your score.

What kind of debt do you have? The last 10 percent of your credit score looks at the kinds of credit accounts you have. A mortgage is viewed differently than credit card debt. A car loan is more positive than a payday loan. The type of debt you have, and the amount of your overall debt that they make up, matters to your FICO score.