You know the importance of good credit for obtaining a mortgage, purchasing a car, applying for credit cards and getting other types of loans. What’s less clear to a lot of consumers is exactly how a credit score is calculated by the credit reporting agencies. Several different factors weigh into the rating that you’re given based upon your history. A San Diego credit card lawyer can tell you more about your specific credit score, but here are some answers to common questions people ask about their rating.

How A Credit Score Is Calculated

What is a FICO score? FICO is the most popular way to rate your credit. The formula was developed by Fair Isaac Corp. and it’s used by 90% of lenders. Under the calculations, your credit score is a three-digit number that indicates your creditworthiness to lenders if you want to apply for a loan or mortgage. Your FICO score is based on the data involved with your usage of credit over time.

Positive activity that will boost your score includes paying bills on time and keeping credit card balances low. A negative history will cause your score to drop, such as being late on or skipping payments.


Why does my FICO score matter? Your credit score as established by FICO is important for a number of reasons.

  1. It determines whether you can qualify for a loan. Lenders for mortgages and car loans will often reject an application for a loan if your credit score doesn’t meet their minimum threshold.
  2. Your FICO score may help you obtain better financing terms. The higher your score, the more confidence a lender may have in your ability to make payments. These companies will often reward good credit with lower interest rates.
  3. For some loans, you’ll need a co-signer if your credit score is low.


How is my FICO credit score calculated?

  •  Payment History (35%): The largest percentage of your credit score depends upon whether you make required payments on time and in full, every month.
  • Amount Owed (30%): Your balances with each type of credit account impact your score. It’s wise to keep your balances at about 30% of the total allotted credit amount.
  • Length of Credit History (15%): This is number of years you’ve been using credit accounts.
  • Types of Credit in Use (10%): Your mortgage, car payment, utility bills, credit cards and other accounts are important types of credit that determine your credit score.
  • New Credit (10%): If you’ve applied for a new card or loan recently, this will qualify as new credit.


Credit Repair In San Diego

Chances are you have many other questions about how a credit score is calculated, and it’s important to know these details before you’re shocked by a rejection or other negative history. Staying on top of your credit can help you qualify for different types of loans and ensure that you get the best payment terms and interest rates. Consult with a credit card debt attorney in San Diego if you’d like to know more about improving your score or options for debt relief.

Daniel R. Gamez, an attorney focusing exclusively in debt settlement, is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in La Jolla, CA. For more information, please contact Daniel Gamez at 858-217-5051, or visit