The calculations used to determine a credit score are different at each credit bureau. However, the scoring models are standardized so that the scores at each bureau are equivalent.

A FICO score is based on information found within your credit report. The 5 basic categories in order of importance are:

1. Payment History - refers to payments being made on time or late, judgments, bankruptcies, collection accounts, and so on.

2. Outstanding Debt - examines the number of outstanding balances, average balance, and ratio of total balances to total credit limits on revolving debt (i.e. credit cards)

3. Credit History - refers to how long you have had your oldest account.

4. Pursuit of new credit - examines when and how many inquiries and new accounts there are.

5. Types of Credit in Use - refers to the number of reported accounts in the various credit card categories (bank cards, travel & entertainment, and so on).

Note: When each FICO score is generated the credit bureau also creates a list of the four most significant reasons why the score was not better.

Improving Your FICO Score

There are things you can do to develop a solid credit history and improve your FICO score.

• Pay your bills consistently on time - recent late payments are more harmful to your score than older late payments.
• Check your credit report and remove any errors - inaccurate information on your credit report can lower your score.
• Keep your debt reasonable - as a general rule, your account balances should be below 75% of your available credit.
• Maintain only a reasonable amount of unused credit - having ready access too much money (instant debt) can make you an unsatisfactory credit risk.
• Avoid too many inquiries - inquiries can be interpreted as a sign that you are seeking credit and could overextend yourself or may be in financial difficulty.

Find Your Credit Score