Understanding FICO

The FICO score range is 300 – 850, with the higher number representing less risk to the lender or insurer. Consumers with high FICO scores are likely to get the best rates when they borrow.

The main factors that go into the FICO scores are:

  • Payment History (35%)
  • Debt/Amounts Owed (30%)
  • Age of credit history (15%)
  • New credit/inquiries (10%)
  • Mix of accounts/types of credit (10%)

Having a strong FICO score (the credit score used by lenders to grant credit to consumers) is important.  It will determine if you are approved or denied for credit and what interest rate you will pay.  Understanding how to manage your FICO score helps to make it less scary.

Here are some proven ways that you can maximize your FICO score and start restoring and rebuilding your credit.

  • Never use more than 25-30% of the available credit limit on your credit cards. For instance, if you have a credit limit of $3000, never go above $750-$1000.
  • If you need to establish credit, open a secured credit card. This is a credit card that is backed by a bank account with a balance. Generally, the credit limit will equal the amount in the account. Just remember to always check and make sure that the credit card company reports to all 3 credit bureaus. Of course, all payments need to be made on time. You can find a list of secured credit cards at by CLICKING HERE.
  • Never close an old account. Part of your credit score is based on how long you have established credit. Therefore, if you close an older credit card (perhaps because you now have a card with a lower rate) you will decrease your FICO score!
  • Periodically use all of your credit cards so they will not become inactive and cancelled by the credit card company or not reported to the credit bureaus because of inactivity.
  • Make all of your payments on time. One late payment (especially a mortgage payment) can decrease your FICO score by 50-100 points!
  • If you are planning to get a loan in the next few months do not try to open any new accounts or get any new credit cards unless your Andorra Credit Specialist instructs you to do so.


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