FICO

This refers to the numeric system of rating credit reliability, often called credit score, devised by the Fair Isaac Company. There are five general areas of information considered in the creation of a FICO score. The first, payment history, makes up about 35% of a consumer’s overall score. Information related to payments on credit cards, retail accounts, car loans and other instalment type of purchases and mortgage payments are considered, especially in terms of whether or not payments are on time, or if payments are missed.

Specific information about late payments regarding the amount of time by which they were late is also a factor, as is the number of accounts that have no late payments. In addition to this type of data, matters of public record are considered. These include liens, judgments, bankruptcies, and foreclosures.

The second set of information to be considered related to the amounts owed, with roughly 30% of the overall score coming from this area of assessment. The third area of consideration is the length of credit history. About 15% of the FICO score comes form this data.

New credit makes up the fourth factor, being about 10% of the score. The final area of consideration has to do with types of credit used. Making up about 10% of the score, this area of consideration looks at all of the different credit account as a whole, preferring a well-rounded representation of the various credit possibilities.