First Hawaiian Bank

How A Credit Score Is Determined

posted on May 1, 2013

A good credit score is important now more than ever. It determines eligibility for all kinds of financial endeavors, such as getting approval for credit cards, good rates on loans, and even getting hired for certain types of jobs. Being aware of the 5 factors that make up a credit score - according to the Fair Isaac Corporation (FICO) formula - can help you increase or maintain your credit score:

  1. Paying Bills On Time (35% of credit score). The later you are, the more points you lose. However, the longer a person pays the minimum balance on time for each credit card or loan, the higher the credit score.

  2. Amounts Owed (30% of credit score). The available balance on a line of credit can be a huge determining factor. Typically the less credit a person uses out of the amount available, the better it will look to the credit bureaus. It's a good idea to keep your purchases less than 25% of the credit limit at any time.

  3. Length Of Credit History (15% of credit score). The longer you've had a line of credit open, particularly with the same creditor, the more points you get. Cancelling credit cards can lower a rating, so it may be better to cut up a credit card you do not want to use instead of closing an account.

  4. New Credit Lines (10% of credit score). Too many new accounts and applications for new lines of credit at one time can be interpreted by credit bureaus as behavior showing high repayment risk and can result in a lower score.

  5. Types Of Credit Lines (10% of credit score). The best credit scores are a result of having a mix of both revolving credit (credit cards, retail cards) and installment credit (auto loan, home loan). Having various forms of credit shows you have more experience with financial matters and a better ability to handle money responsibly.

If you would like additional information on how to improve your credit score or stay safe as a consumer, please contact Hawaii’s Better Business Bureau at (808) 536-6956, through their website at, or you can speak to them in person at our PrimeTime Wellness Fairs in 2013..

Information is courtesy of Hawaii's Better Business Bureau.

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