How your FICO score is calculated
FICO is the dominant credit score used by US lenders, with VantageScore a distant second. The score ranges from 300 to 850 and is built from five categories: payment history (35%), amounts owed (30%), length of credit history (15%), credit mix (10%), and new credit inquiries (10%). Scores above 740 typically unlock the best rates; below 670 starts costing you serious money in higher APRs.
On a $350,000 30-year mortgage, the rate gap between a 760 FICO and a 680 FICO is often 0.5% to 0.75%. At 6.5% vs 7.25%, that’s about $175 more per month, or roughly $63,000 more interest paid over the loan’s life. The score is free to check via the lender or annualcreditreport.com; the savings are not.
Closing your oldest credit card to ‘simplify’. You shorten your credit history and shrink your total available credit, which spikes utilization on the rest. If there’s no annual fee, keep it open and put a small recurring charge on it.
A 60-second lesson on this, with a worked drill, lives inside the Finlo app. Free, forever, on the basics.