Your overall FICO score will determine what kind of rates you will get from your lender. Your FICI score applies to all loans – personal, car, boat, and home. The higher your score, the more favorable your interest rates will be.

Your FICO score is determined by these 5 factors:

Payment History (35%) – If you always pay your debts on time and have no bankruptcies this is a positive.

Total Amount of Debt (30%) – This is the measure of all the accounts that you have open. FICO also measures the amount of credit you have available vs. the amount you are using and factors that in here. For example, if you have $20,000 available on a credit card, but only have an outstanding balance of $200 this is obviously much better than being maxed out at the full $20,000.

Credit History (15%) – A longer credit history is generally better, but if the rest of your credit report is good, you can still get a good FICO score.

New Credit (10%) – Showing a sudden increase in seeking new credit may lower your score. When a bank runs your credit history this may very well impact your score by up to 5 points. But FICO takes into consideration multiple applications for a specific loan. For example, if you are shopping around for a more competitive house loan rate and you have your credit checked by multiple lenders. However, it is advised to get these multiple checks done in a condensed time frame, like a 30 day period, so that FICO can clearly see your intensions and so your score doesn’t become adversely affected.

Other Consideration (10%) – With a longer credit history, it is considered good to have diversity in your debt. It would be a plus to have a mix of credit card debt, car loans, property loans and personal loans.