What is the FICO Score?
Fair Isaac Corporation (FICO) Score is used by lenders to assess how likely borrowers are to pay their credit obligations as agreed.
The FICO scoring range is between 300 and 850, where a score greater than 750 is considered excellent.
How is the FICO score calculated?
The exact formula is not disclosed, but the factors and their associated weights are below:
-- 35% of the FICO score is based on payment history
-- 30% of the FICO score is based on amount owed
-- 15% of the FICO score is based on length of history
-- 10% of the FICO score is based on new credit
-- 10% of the FICO score is based on types of credit used (for example, home mortgage, student loans, credit card, vehicle loan, etc.)
As you can see from the weights/factors above, 100% of the FICO score is based on DEBT!
Factors NOT considered in FICO score:
Income/Salary
Savings
Net Worth
Investments
Retirement Savings
Marital Status