Your credit score is a sort of numeric "grade" of how reliably you are to keep your promise to repay a creditor. An increasingly common name for credit score is "FICO™ Score." FICO™ is a trademarked acronym for "Fair, Isaac and Company," the company that developed the particular scoring method used to create the score.
FICO(TM) scores range from 350 to 850; the higher it is, the better creditors like it. Scores are based on approximately 30 factors, some of which have little relation to your income or assets. These factors include:
Your Payment History
Do you make your payments on time? Have you had accounts turned over to collections? FICO takes away point for bad payment behavior, and gives points for good payment histories.
Your Outstanding Debt
FICO places much interest in the number of balances you have, the average of all these balances, and the ratio between total credit limit and balance outstanding. Carrying too much credit lowers your FICO score even if some of your accounts carry zero balances. FICO doesn't like to see you near or at your credit limit either.
Your Credit History
FICO looks at how long you've had any accounts, the total number of inquiries, and if you've recently opened any new accounts. The scoring system is highly concerned about inquiries and new accounts that are less than one year old.
Your Types of Credit
FICO is very interested in your credit diversity. It looks to see if you use credit cards, debit cards, department store cards, travel/entertainment cards, personal finance companies and installment loans.
Negative Information
Bankruptcies, late payments, collections, late fees, too many credit accounts carrying maximum balances, too little credit history (less than five credit lines in the past 5 years), and too many credit inquiries are all considered negatives.
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