Understanding FICO scores:

What's my credit rating? Credit ratings are reported as a FICO score.

The FICO score is made up of:

35% Payment History of your credit accounts
30% Ratio of debt to total credit limits
15% Length of credit use
15% Variety of credit types
5% other

FICO scores range from 300 to 850. A FICO score of 720 or above is best and will qualify you for the lowest interest rates for credit.

Payment History includes the severity of any delinquencies you may have as well as how frequent you may be delinquent on payments. While payment history is important, it is almost equally import to have a low amount of debt compared to you available credit limits. If all of your credit cards are at their limit, you will see it affect your FICO score. Some credit analyst propose that your outstanding debt be 35% or less than your credit limits. How long you have had credit accounts will also affect your credit score. You may not want to cancel a credit card once you have it paid off, because the payment history will eventually be deleted from your credit report.

L.Taylor
9/16/2008