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Which of the 5 Factors of your FICO Score Impacts it the Most?

Updated: Dec 1, 2023

You probably are aware your FICO score is crucial to mastering your business credit.

Are you aware of the different aspects of your FICO score?

There are actually five different factors:

  1. Payment History

  2. Amount of Debt

  3. Length of Credit History

  4. New Credit

  5. Credit Mix

Let's break down how the significance of each element and how they will set you up for success.

Payment History

First things first, your payment history is the most important aspect of your FICO score. It makes up a whopping 35% of your score.

To put it into perspective, if you miss one to two payments, it can absolutely be detrimental.

Not only do you want on-time payments, but you also want years of on-time payments.

One quick hack to maintain your FICO score is to have a better payment history and a consistent payment on-time credit history. This is just one of the many hacks that we discuss here in the Credit Stacking community.

The longer you show a history of on-time payments, the more positive your payment history will reflect on your credit score.

Amount of Debt

The amount of debt shows how much debt lenders have actually lent to you. More specifically, the amount of debt you’re using, or your utilization.

If you are maxing out on your credit card might tank your credit score. Having debt is good, but pushing your utilization to the limit is not the best idea.

The amount of debt makes up about 30% of your FICO score.

A Credit Stacking hack we use to balance the amount of debt you take on is to open multiple business accounts.

Length of Credit History

The longer your accounts have been open, the better your credit score is going to be.

If you’re very new to credit or only have owned a card for six months or so, you have a very low average age.

In the Credit Stacking community, we often talk about why it makes sense to keep accounts open and never close them. It only helps you to have those accounts open. You never know when you’ll get back into those older accounts.

Length of Credit History is about 15% of your FICO score.

New Credit

This consists of your hard inquiries.

Any time a lender looks at your credit they’ll do a hard pull and you’ll get a hard inquiry on your credit. Also, any time you get approved or denied for a credit card, you’ll get a hard inquiry.

If a lender sees you have more than two hard inquiries in a short amount of time, you look a bit riskier.

A Credit Stacking hack is to strategically space out your credit card applications. Giving yourself a six-month gap should be a long enough space between applications.

Thankfully, this is only 10% of your FICO score.

Credit Mix

This is just a mix of what kind of credit do you have.

Do you only have revolving credit cards? Do you have auto loans? Student loans? A mortgage?

In the Credit Stacking community a hack is to have some debt in all four. It will actually benefit you more. This will make up the last 10% of your FICO score.

To sum it all up,

  • Payment History 35%

  • Amount of Debt 30%

  • Length of Credit History 15%

  • New Credit 10%

  • Credit Mix 10%

Debt is good, so long as you pay it off. Also, make sure you don't have too many credit checks in too short a time.

For more insight into FICO score, and all things credit-related, become part of the Credit Stacking family. Fund your dreams like a pro by taking advantage of the business credit system.

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