How is Your FICO Score Determined?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - January 5, 2018

It’s helpful to learn the factors that determine a person’s FICO score before applying for an auto loan.

What’s in a FICO Score?

The FICO score is the most commonly used credit scoring system for auto loans. A person’s FICO score is determined using information from their credit reports. There are five main things that go into someone’s score:

  • Payment History: 35% – The most important credit scoring factor looks at borrowers' track record with past payments. Lenders look to see if a borrower has been consistent with payments on loans, credit cards, mortgages, and more.
  • Amount Owed: 30% – Lenders want to see how much debt a borrower has across their credit accounts. A big part of this factor is a consumer's credit utilization ratio – a person's credit card balances compared to their card limits. Using a high percentage of available credit can be seen as red flag.
  • Length of Credit History: 15% – A consumer's credit history pertains to how long accounts have been open, how long it's been since accounts have been used, and the average age of all accounts. Lenders want to see if and how long a borrower's been able to handle credit in the past. Borrowers with shorter credit histories can still have good FICO scores.
  • New Credit: 10% – FICO scores consider how many and how long since a consumer has opened new credit accounts. The same goes for hard inquiries on their credit reports. Lenders don't like to see several recent inquiries and/or new accounts because it makes it harder to asses risk.
  • Mix of Credit: 10% – Credit scores consider what types of credit accounts a person has between revolving credit (credit cards) and installment credit (loans, mortgages). Lenders like to see a borrower be able to handle a diverse mix of credit.

As for the number, FICO scores range from 300 to 850. Credit scores influence what interest rate someone qualifies for. The following is an outline of typical credit score ranges:

  • Excellent: 750 and above
  • Good: 700 to 749
  • Fair: 650 to 699
  • Poor: 550 to 649
  • Bad: 550 and under

Consumers with higher credit scores are able to qualify for better interest rates. That’s not to say that low or bad credit will shut someone out, it’ll just take more legwork and time. Here at CarsDirect, we want to help people in all different credit situations find financing for their next vehicle.

Keeping Up with Your Score

Maintaining your FICO score at a good number makes it easier to qualify for auto loans. But, things can happen, and sometimes it isn’t easy to get your score back up. If you find yourself with less than perfect credit and need a new vehicle, CarsDirect wants to help.

We've teamed up with a national network of car dealers that know how to handle challenging credit situations. Use our free service, and we'll connect you with a local dealership that wants to help. Get started by filling out our fast and secure car loan request form today.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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