Steve and Lisa's Mortgage Morsels

Payment history and debt total are important parts but not the only factors in the land of credit scores, FICO is king. The bulk of banks in the United States use FICO scores to decide whether to offer credit to potential borrowers and at what interest rate. FICO has a major global presence, as well. According to the company's testimony before a House Financial Services Committee, FICO scores are used in about 10 billion decisions worldwide each year.

So how does FICO come up with its widely used score?
While the inner workings of the FICO scoring system are a closely guarded secret, the company is open about the general components of a FICO credit score. Using the information in a borrower's credit report, FICO breaks that information into categories. Those five components each get different weights. "FICO scores give the most attention to how you have paid back lenders in the past and how much you are using of the credit available to you, as shown on your credit report. Those two factors contribute roughly two-thirds of a typical person's FICO score," says FICO spokesman Craig Watts.