How your Credit Score is Scored

Most lenders determine 35 percent of the score from your payment history on your credit accounts, with recent history weighing more heavily than the past history. Your total amount owed weighs in at 30 percent, and is based on the total amount of debt you have outstanding with all of your creditors. Dating back when you first started your credit is rated at 15 percent. A longer history is better if you have made your payments on time. New credit is 10 percent, and is your very recent history and whether you've been seeking loans or credit lines. And 10 percent is calculated from a mix of credit you hold, including installment loans like bad credit auto loans, auto leases, home loans, and credit cards.

To help lenders make decisions, credit bureaus often provide a risk score. Credit bureau scores are often called *FICO scores. FICO scores are provided to lenders by the three major credit reporting agencies: Equifax, Experian, and Trans Union. FICO scores provide the best guide to future risk based solely on credit report data. The higher the score, the lower the credit risk and the lower the score the higher the credit risk. But no score determines if a particular individual will be a good or bad customer. While many lenders use FICO scores to help them make lending decisions, each lender has its own policy, including the level of risk it finds acceptable for a given credit product. There is no single score used by lenders to determine if you are approved or not.