Understanding your FICO Score.

Learn how to BUILD YOUR CREDIT SCORE...
We will use FICO 8 here, not your Vantage Score!

Yes, YOU control what your credit score is and nobody else. Everything on your credit files is something YOU did. Nobody else, nobody can fix it but YOU!

So, how can "I" build my own credit score and have the one I want?

First, let's break down what the FICO 8 credit file consists of and how it's being calculated. (Warning: We will be doing Math ahead!)

Let's lay out some facts as we know from what they tell us.

Your FICO 8 Score consists of:
Payment history: (35%)
Amounts owed (credit utilization): (30%)
Length of credit history: (15%)
New accounts: (10%)
Credit mix: (10%)

Score Ranges:

FICO SCORE (Bad): 300 - 649
FICO SCORE (Fair): 650 - 699
FICO SCORE (Good): 700 - 749
FICO SCORE (Excellent): 750 - 850

Now, each part of the Score makeup within itself:

Payment History:
Poor: < 97%
OK: 97%
Good: 98%
Excellent: 100%

Amounts Owed (Credit Utilization):
Poor: +75%
OK: 50-74%
Good:30-49%
Best: 10-29%
Excellent: 1-9%

Length of Credit History:
Bad: < 2 yrs
OK: 2-4 yrs
Good: 5-6 yrs
Better: 7-8 yrs
Excellent 9+ yrs

New Accounts:(Inquiries)
Poor: 9+
Bad: 5-8
OK: 3-4
Better: 1-2
Best: 0

Credit Mix: Bank-Issued / Credit Card / Installment Loans
OK: 0-5 Accounts
Good: 6-10 Accounts
Better: 11-20 Accounts
Best: 21+ Accounts

Now, the Score values: 

Totals:

The MINIMUM FICO Score is 300 and the MAX FICO Score is 850.

Each category we are told has a "so-called" percentage of your score. Honestly, these are not exact so we have to take them at face value and assume that they are close to what they say they are. THIS IS JUST AN ESTIMATE.

As you can see, the Score Makeup formula above, each section has the MIN/MAX number of points available.

Example:

Payment history: (35% ) 122.5 - 297.50
Amounts owed (credit utilization): (30%) 105- 255
Length of credit history: (15% ) 52.5 - 127.50
New accounts: (10% ) 35 - 85
Credit mix: (10% ) 35 - 85

Now, we assign points evenly across the values above and we get a Matrix of what each category value is by each grade of that value and put it all together. 

We have rounded the number off and dropped the 10ths for ease of use. So it's "close" not exact - but it works!

Payment History:
Poor: < 97% = 122 points
OK : 97% = 188 points
Good: 98% = 240 points
Excellent: 100% = 297 points

Amounts Owed (Credit Utilization):
Poor: +75% = 105 points
OK: 50-74% = 143 points
Good:30-49% = 180 points
Best: 10-29% = 227 points
Excellent: 1-9% = 255 points

Length of Credit History:
Bad: < 2 yrs = 52 points
OK: 2-4 yrs = 71 points
Good: 5-6 yrs = 90 points
Better: 7-8 yrs = 109 points
Excellent 9+ yrs = 128 points

New Accounts (Inquiries):
Poor: 9+ = 35 points
Bad: 5-8 = 48 points
OK: 3-4 = 60 points
Better: 1-2 = 73 points
Best: 0 = 85 points

Credit Mix: Bank-Issued / Credit Card / Installment Loans
OK: 0-5 Accounts = 35 points
Good: 6-10 Accounts = 47 points
Better: 11-20 Accounts = 73 points
Best: 21+ Accounts 85 points

With this, you can look at your credit file and get a ROUGH idea of what effect each part of your credit file has and what will have the most impact. For example, we will build a credit file. We'll use mine to discover how the FICO scorecard works.

My TRUE FICO is 702. I matched each section up with the points above:

Payment History:
Excellent: 100% = 297 points
Amounts Owed (Credit Utilization):
Best: 10-29% = 227 points
Length of Credit History:
Bad: < 2 yrs = 52 points
New accounts (Inquiries):
Poor: 9+ = 35 points
Credit Mix:
Best: 21+ Accounts 85 points

TOTAL POINTS: 696 Points, which is close to my 702 real FICO Score. Out of 500+ variants being 6 points off isn't bad for guessing how they calculate the score.

So, what does this tell me? Let's see what happens when I adjust something. Let's drop my CARD UTILIZATION down to the next level:

I will gain about 28 points, instead of 227 points, I will get 255 points. When this happens, my FICO should be close to a 730 FICO.

See how it works on your end. 🙂

Get a calculator and have fun!