How FICO scores are determined

The calculations used to determine a credit score are different at each credit bureau. However, the scoring models are standardized so that the scores at each bureau are equivalent.

A FICO score is based on information found within your credit report. The 5 basic categories in order of importance are:

1. Payment History - refers to payments being made on time or late, judgments, bankruptcies, collection accounts, and so on.

2. Outstanding Debt - examines the number of outstanding balances, average balance, and ratio of total balances to total credit limits on revolving debt (i.e. credit cards)

3. Credit History - refers to how long you have had your oldest account.

4. Pursuit of new credit - examines when and how many inquiries and new accounts there are.

5. Types of Credit in Use - refers to the number of reported accounts in the various credit card categories (bank cards, travel & entertainment, and so on).

Note: When each FICO score is generated the credit bureau also creates a list of the four most significant reasons why the score was not better.