What Drives a Credit Score?

by Tom Quinn on 07/05/2011

I frequently get questions from consumers wanting to understand what credit information in their credit report is most important or most heavily weighted in the calculation of their credit score.  Each person’s score is unique as it reflects projected risk based on credit information resident on that person’s credit file at the time the lender requests a score and credit report to make a lending decision.

Both FICO and VantageScore provide information regarding each category of credit behavior their scores take into account, and the relative importance of each in determining a credit score.

Pie Chart: Credit attributes contributing to a VantageScore. Source:www.VantageScore.com

Pie Chart: Credit attributes contributing to a FICO Score. Source:www.myfico.com

You can see that there is some variation in categories used by each of the two companies, as well as the percent of contribution a given category represents.  Each company that develops a credit risk scoring system has its own unique approach and the final scoring models will differ. While the pie charts do illustrate variations, they also show that there are similarities in the two models.  Both scoring systems show that the three fundamental aspects of good credit management practices are what really drive a good credit score and hold true regardless of score version:

  • Make sure you consistently pay your bills on time
  • Keep credit debt levels reasonably low (credit cards, installments loans, etc.)
  • Only seek and obtain new credit when needed

Following these guidelines will help you maintain a good score or help raise a lower score over time.

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Image: www.fico.com

Tom Quinn Credit.com’s Consumer Credit Expert, Tom shares invaluable insight to navigating the often complicated world of credit scoring, credit reporting and credit granting industry practices. Formerly with FICO (Fair Isaac), MDS (now Experian) and Citibank, Tom has more than 20 years of experience in the credit industry and is currently Vice President of Scoring at Nomis Solutions. Reach Tom at creditexperts@credit.com.


{ 1 comment… add a comment }

orchard bank July 21, 2011 at 4:17 PM

Thank you for this informative post about what drives a credit score. I also agree that the good credit management practices are probably the most important factor of any good credit score.


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