The amount owed is the second most important factor in your FICO credit score at 30%.

Improving your credit score: Amounts owed

Around 30% of your FICO® credit score is calculated based on the total amounts you owe.*

An important factor in calculating your FICO® score has to do with how much you owe on all your lines of credit.

For revolving credit lines, like a credit card, FICO® may compare how much you owe to your credit limit. A high debt-to-eligible credit ratio could  indicate higher risk. If you owe $100 on your credit card and your credit card limit is $500, you have a low debt-to-eligible credit ratio on your credit card ($100 to $500).

With an installment loan, they compare how much you owe to the original borrowed amount.  The more you have paid off, the more likely it is to improve your FICO® score.

What is a FICO® credit score and what goes into it?
A credit score is a calculation that indicates how likely you are to pay back debts. The FICO® score is the most common type, and is a three digit number (between 300 and 850), where a higher score means more likely to pay back a debt. It is calculated by a math formula that takes into account the following factors:

Payment history (35%)
Amount owed (30%)
Length of credit history (15%)
Credit mix (10%)
New credit (10%)

Learn more

Two ideas to reduce the amount of money you owe:

  1. Pay off your credit card bill in full every month. While credit cards do allow you to carry a balance, it’s extremely expensive to do so.
  2. Don’t open new lines of credit to increase your eligible credit. While this might shrink your debt-to-eligible credit ratio, it doesn’t help you pay off money that you owe. This tip comes straight from FICO®, and is a good one.

The best way to reduce the amount you owe is to avoid credit card debt.

*FICO® is solely responsible for its credit score calculation. Information contained on the FICO® website is its own content and is not managed, sponsored or endorsed by Oportun. Oportun does not require a credit score to qualify for its products nor does Oportun rely on this score.

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