About FICO Credit Scores

The three main credit bureaus each composite a FICO credit score based on five factors: payment history, debt to credit ratio, years of credit history, credit types and newly opened credit accounts.

Payment history accounts for the biggest percentage (35 percent).
Debt to credit ratio accounts for 30 percent, followed by the years of credit history at 15 percent. The final two, newly opened credit accounts and credit types, each hold a 10 percent weight in calculation.

Your FICO credit score is the most important aspect of your financial health.

The higher your credit score, the lower your interest payment will be on credit cards, personal loans and mortgages. For example, if you have a FICO score around 650, you may pay over 8 percent interest on a fixed mortgage loan. If you have a score around 750, you may pay only 6 percent interest. On a $350, 000 loan, that would be a $450. 00 per month difference on a 30-year mortgage.

Everyone is entitled to one free credit report from all three major credit bureaus every year.

Many people don't realize, however, that FICO scores are not printed on credit reports. Instead, you must pay for one or all three FICO scores from each agency. The scores can vary depending on what part of the month that each updates its system. Although you can't get your FICO score from your credit report, you should check your report multiple times per year. To take advantage of the three free credit reports, rotate, pulling one credit report from a different agency every four months.

To repair your FICO score, or maintain a high score, there are many things you can do.

First and foremost, pay your bills on time. For the most part, a late payment every once and a while won't hurt. It's the pattern of being late that sends out red flags. Keep your credit card balances well below their limits. Staying at 30 percent debt or less is best for a credit card. If you decide you don't want to use your credit cards anymore, do not close the accounts. The longer your history, the higher your FICO score. Finally, limit your loan inquiries. If you want a car loan, for example, go only to one or two financial institutions. The more credit pulls on your account, the riskier you look.

The three main reporting credit bureaus are Experian, TransUnion and Equifax.

Each provides a different FICO score ranging from 300 to 850. Although they typically hover around the same number, the scores can vary by as much as 50 points.