Credit score: what yours is made of

Curious about what goes into your credit score? It’s been more than a year since I wrote about this, so it’s time to revisit this ever useful information.

There are five parts to your credit score. Payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and

types of credit (10%). FICO, a financial analysis firm, uses these categories to rate consumers’ credit risk with a three-digit score. Within each category, there are up to seven factors.

For example, in the payment history category, credit rating agencies consider how many accounts you are up to date on, whether you have a bankruptcy or lien, and how long an overdue bill has been past due, among other factors.

In the length of credit history category, they consider how long it’s been since you opened an account, how long each specific account has been open, and how recently you’ve used each account. Read all the factors that are considered for each part of your credit score.

This is important stuff to know, but unfortunately the three credit rating agencies, TransUnion, Experian, and Equifax, don’t share specifics. How many points do I lose if I have a bill past due seven months instead of two? How many points do I gain if I am paid up on three accounts instead of one? We don’t know because they won’t tell us.

More information would help consumers improve their score, but getting a copy of your free credit history report (sans FICO score) through the FTC, is a good start. Look for open accounts that can be closed, errors, and mistakes. Fixes can take months, so get started early if you plan to apply for a mortgage or car loan.