Devoted to interest rates, loans, and lending institutions

Yesterday we took a brief look at the importance of your credit score (also sometimes called a FICO score) in home mortgage financing. But that doesn't tell you what goes into your credit score. And that is an important thing. Knowledge is power, and you should know how your FICO score is figured.

While the interplay of all of the elements in a credit score is subtle and not always straightforward, you can get a general idea of how important certain aspects of your personal finances are when it comes to your credit score.

• 35% of your FICO score has to do with your payment history. Do you make payments on time? Do you pay the full required amount each time? Remember: if you fail to pay on bills like utilities, that can be reported too -- even though it isn't a loan.
• 30% of your FICO score is concerned with how much debt you have right now. This includes outstanding debt on credit cards, various loans (even payday or department store), cars and medical bills.
• 15% of your credit score is dependent on your credit history. How long is it? How long have you had a credit card? Even if you aren't using the credit card right now, or if you paid off the old car loan, the length of time it has been since you first got credit is important.
• Credit inquiries account for 10% of your FICO score. If you apply for credit, this will show up, and affect your score.
• The final 10% of your FICO score is based on the kind of debt you have. A mortgage is considered "good" debt (well, some mortgage anyway). Payday loans and department store credit cards are considered "bad." The shadings are imprecise, but you get the idea.