Learn About Credit

FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The charts below reflect how important each of the categories is in determining your FICO score.

  • Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
  • Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
  • Severity of delinquency (how long past due), and how many items are past due
  • Amount past due on delinquent accounts or collection items

Amounts Owned

  • Amount owing on accounts and number of accounts with balances
  • Amount owing on specific types of accounts
  • Lack of a specific type of balance, in some cases

Length of Credit History

  • Time since accounts opened
  • Time since accounts opened, by specific type of account
  • Time since account activity

There are three major credit reporting agencies in the United States: Experian, Equifax and TransUnion. A credit reporting agency gathers information from various providers and supplies credit data on individual consumers. Each credit reporting agency has its own formulas for calculating credit scores.

Companies that supply your credit information to consumer reporting agencies have to follow specific credit reporting rules, as listed under the federal Fair Credit Reporting Act. The act stipulates who can obtain a copy of your credit report and in what circumstances.

Credit plays an important role in your life — affecting the purchases you make and much more. For more than a decade, Experian has been America’s number one provider of credit information. In addition to credit reports, we offer guidelines to help you successfully manage your credit rating and protect against credit card fraud. The more insight you have about credit, the easier it is to strengthen your financial well-being.

The Equal Credit Opportunity Act forbids creditors from considering race, sex, marital status, national origin, and religion. Lenders and other institutions argue that credit-scoring systems provide a consistent, mathematical system to evaluate individuals. Institutions argue that a credit score is superior to the previous method of evaluation by a loan officer because the loan officer was given too much discretion, which gave rise to problems such as bias. Others argue that the disparate loan denial ratio has not changed since the implementation of the credit score, and the outright discrimination of the past was simply replaced with a more subtle form of discrimination that is built into the credit scoring calculations through the programmers’ judgment calls regarding which factors to consider, and the amount of weight assigned to these factors.

Some clients ask: “How are credit scores calculated?” The amount of money that you owe approximately accounts for 30 percent of your credit score. Ten percent of your score falls under a category is categorized as “new credit” This category reflects factors such as the number of new credit accounts on your credit report.

The more new accounts you have open, the more poorly this reflects on your score. These factors are just a few among many, and your credit score is determined by a complex formula that takes into account over 100 different factors

While different lenders may evaluate scores differently, generally, a score above 680 is considered to be prime. Individuals with scores between 680-575 are likely to receive subprime loans, and individuals with scores below 540 will generally be denied credit altogether.


  • K2 Credit Solution improves client’s FICO scores within 30-45 days
  • Remove derogatory accounts appearing on all three major credit agencies; Experian Equifax, and Trans Union
  • Negotiate on behalf of the client for any outstanding debts
  • Update all personal history with the three credit agencies
  • Educate our clients on long-term management strategies