Your FICO score is a three-digit number between 300 and 850. It determines whether you get approved for a mortgage, what interest rate you pay on a car loan, and whether a business lender will even take your call. Yet most people have no idea how it's actually calculated.
The 5 Factors That Make Up Your FICO Score
1. Payment History — 35%
This is the single biggest factor in your score. A single 30-day late payment can drop a good score by 60–100 points. The damage fades over time, but late payments stay on your report for seven years.
Key action: Set up autopay for the minimum payment on every account. Consistency over 12–24 months rebuilds a damaged payment history significantly.
2. Credit Utilization — 30%
Utilization is the ratio of your current revolving balances to your total credit limits. Borrowers with scores above 800 typically carry utilization under 7%. The lower, the better.
Key action: Pay down revolving balances before your statement closing date — not your due date.
3. Length of Credit History — 15%
This considers the age of your oldest account, your newest account, and the average age of all your accounts. Keep your oldest cards open even if you rarely use them.
4. Credit Mix — 10%
Lenders want to see that you can manage different types of credit responsibly — both revolving accounts and installment loans.
5. New Credit / Inquiries — 10%
Every time you apply for new credit and a lender pulls your report, it creates a hard inquiry. Each hard inquiry can drop your score by 5–10 points. Space out applications by at least 6 months.
Score Ranges and What They Mean
- 800–850 (Exceptional) — Best rates on all products.
- 740–799 (Very Good) — Near-prime rates, strong approval odds.
- 670–739 (Good) — Approved for most products.
- 580–669 (Fair) — Higher rates, lower limits.
- 300–579 (Poor) — Secured products are the path forward.
FiStarr's target for funding readiness is 700+. That's the threshold where lenders open the door to real capital.