FICO Score Calculation
FICO Score Calculation? Yes, there is a FICO score formula, and you can easily calculate your FICO score on your own. Simply follow the guidelines outlined below, and take 100% as 850.
Use this FICO Score Estimator to help you obtain free FICO credit score – get a free online FICO score without having to pay $9 to the credit bureau for a copy of your report!
What is my FICO score rating?
35% of your FICO score rating – Timely Bill Payments
This is one of the most important determinants of credit trustworthiness. More importantly, you have the ability to dramatically improve this component of your score.
Ensure that you do not miss any payments especially in the months just before you apply for a mortgage or car loan. Just one late payment can already drop your score by as much as 75 points – so always pay your bills on time! A good idea would be to set up an automatic bills payment system, so your fixed monthly bills are automatically deducted from your account, without any hassle on your part.
30% of your FICO score calculation – Debt-to-credit-limit ratio
What is your debt-to-credit-limit ratio? This ratio simply measures the proportion of how much you owe to how much credit you have. Hence, it may not be a wise idea to close credit card accounts that are unused. As long as you hold some amount of debt, closing any credit account will increase your debt-to-credit-limit ratio as your total credit available will be reduced.
To improve your debt-to-credit-limit ratio, you can either call credit card companies and ask to raise your limits, or gradually seek to reduce your debt.
15% of your FICO score calculation – Credit History
Your credit history goes back ten years. The longer your reported credit history, the more credible you will appear to the banks and the credit card companies. Thus, it may be wise to keep unused credit card accounts that you have used many years ago. They add to the length of your reported credit history.
The remaining 20% of your FICO score rating
The remaining 20% consists of a multitude of factors, but you will be able to ensure a high FICO score by adhering to the following guidelines:
Demonstrate your ability to manage debt responsibly
Having credit cards (and always making your payments on time) will actually raise your FICO score, as it demonstrates your ability to manage debt responsibly.
Weigh your options carefully before declaring bankruptcy
Please be aware that declaring bankruptcy would lead to a black mark that stays on your credit report for 10 years. This will affect your FICO credit rating adversely.
Limit the opening of new accounts
FICO scores also consider your average account age and related factors such as the number of recent requests for credit you have made and the number of credit report inquiries made by lenders.
Hence, the best guideline will be to only open accounts that you need, as each new account will hurt the factors listed above.
Now you know how to do FICO Score calculations on your own easily – be sure to use it to your advantage!