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Owing money does not make you a high risk borrower or lower your FICO score. Using most of your available credit means you are likely to default on a
payment, making you a high risk borrower.
The length of your credit history - About 15 % of your FICO score is based on the average time you have had your credit. A person who has had a credit card for 29 years and opened a new one a year ago has the same length of credit history as someone who opened 2 credit card accounts 15 years ago. A longer credit history in general will increase your FICO score.
This category also considers how long specific
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credit accounts have been on your credit report and how long it has been since you used certain accounts.
The variety of credit - Contributes 10% to your credit score. It looks at what kinds of credit you have, credit cards,
retail accounts, mortgage loans or installment loans and how long you have had these accounts. If you have a good mix of different types of credit, it can
help your score.
How often you have applied for new credit - This category accounts for 10 % of your FICO score. With the attractive
offers credit card companies invent everyday; it is tempting to open new credit card accounts to take advantage of the features. Your credit score takes
into account how many new accounts you have opened and the types of credit accounts opened. It considers how long it has been since a new account has been
opened and how many recent inquiries have been made on you credit report. Inquirers remain on your credit report for two years and FICO scores only consider inquiries within the last 12 months.
FICO scores range from 350 to 850. The lower your score, the more of a risk you seem to lenders. According to FICO, most Americans fall into the range of 750-799.
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