How Do Credit Reporting Agencies Calculate FICO Scores

June 16, 2010 | Leave a Comment

Your payment history and the amount of debt you owe are important factors, but not the only issues that affect your score. Your FICO is the important issue in setting you credit score and borrowing potential.

Many banks in the USA use FICO scores to determine if they should render credit to prospective borrowers and at what interest rate they should offer loans. On a global level your FICO score is important as well. Interestingly, a report from the Financial Services Committee in the U.S. House of Representative stated that FICO scores affect over 19 billion transaction daily.

So what are the factors that determine a FICO score? By assessing variables within your credit history, a calculation is made about what your FICO score is. There are basically five variables or components that comprise your FICO score.