If you are working on fixing your credit and improving your credit scores, it would be a great idea to first understand what factors exactly go into the algorithm of how your FICO score is calculated. Your FICO score consists of five simple factors:
Graph of the breakdown of how your credit score is calculated


Payment History (35%): Are you making all your payments on time? Do you have a series of late payments and delinquencies? Your payment history accounts for the bulk of your credit score. Even if you’re carrying high balances on your credit cards, as long as you’re making at least the minimum payments every month, this part of your credit score will remain unscathed.

Amount of Debt (30%): Now for those of you who are carrying high balances on your credit cards, 30% of your FICO score consists of your amount of debt (a.k.a. debt-to-income ratio). Lenders and creditors look down upon applicants with faulty debt-to-income ratios. For example, if you owe $13,000.00 in credit card payments and only $5,000.00 has been paid off, this part of your credit score will suffer. It’s highly suggested that you keep your debt-to-income ratio at 36% or below.

Length of Credit History (15%): If you own credit cards and other forms of credit, how long have your accounts been open? The longer the better. If you only own two credit cards that have been opened during the last 6 months, most likely this part of your FICO score will suffer.

New Credit History (10%): As important as it is to have credit accounts that have been open for 7 years or longer, new credit history also plays a minor role in improving your credit score. That’s why, in addition to disputing negative items on your credit reports; credit repair services help you establish new credit. Whether it’s in the form of secured credit cards, unsecured credit cards, or trade lines–establishing new lines of credit can help boost your score by at least a few points.

Types of Credit (10%): Lenders and creditors appreciate variety. Successfully managing one or two credit cards will help your credit score in the long run, but your credit score will be further improved if you successfully juggle different types of credit (i.e.: mortgage loans, car loans, student loans).

Need help or do you want to expedite the process of raising your score? Try Sky Blue!

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