How Does FICO Score 5 From Fair Isaac Corporation Work?

FICO Score 5 evaluates five core areas of your credit behavior. Those pillars determine the 300‑850 score discussed in the next section.

• Payment history (35%) - on‑time payments boost your score; late, missed, or charged‑off accounts can lower it, especially within the first 12 months.
• Amounts owed (30%) - high balances relative to limits (credit utilization) can drag the score down; keeping utilization under 30 % is usually safe.
• Length of credit history (15%) - older accounts and a long average age help; recent openings have a smaller positive impact.
• New credit (10%) - recent hard inquiries or many new accounts can reduce the score, though a single inquiry usually has a modest effect.
• Credit mix (10%) - a blend of revolving, installment, and mortgage accounts can add points; lacking variety doesn't automatically hurt the score.

FICO Score 5 calculates a number between 300‑850 by converting each of five credit‑report factors into a sub‑score and then applying its statutory weight: payment history 35%, amounts owed 30%, length of credit history 15%, new credit 10% and credit mix 10%.

The model pulls the most recent 24‑month data, assigns a provisional score to each factor (for example, a flawless payment record yields a near‑maximum payment history sub‑score), multiplies by the factor weight, and adds the results.

FICO 5 then runs the weighted total through a proprietary logistic regression that maps the composite to the 300‑850 scale, adjusting slightly for very recent activity such as a hard inquiry or a new account. This produces the final credit score you see on your report. The following section will translate that number into the commonly used score ranges and explain what they mean for you.

FICO Score 5 translates your credit profile into a single 300‑850 figure, and each band signals how lenders will treat you and the pricing you can expect.

• 300‑579 (Very Poor): lenders often deny applications or offer the highest interest rates; credit cards may have low limits and high fees.
• 580‑669 (Fair): you may qualify for some loans, but rates remain above average and approvals are less certain.
• 670‑739 (Good): most mainstream credit products approve you at near‑average rates; you'll see moderate credit‑limit offers.
• 740‑799 (Very Good): you're eligible for low‑interest loans and higher credit limits; lenders view you as low risk.
• 800‑850 (Exceptional): you receive the best rates, premium credit‑card rewards, and the highest limits; lenders competitively chase your business.

Lenders look at your FICO Score 5 to decide whether to approve you, what interest rate to offer, and how much credit to extend. The score sits on a 300‑850 scale; higher numbers signal lower risk, so a 750‑plus rating often unlocks the best loan terms, while scores under 650 can trigger higher rates or a denial.

Each of the five weighted factors feeds the lender's model: payment history (35%) can lower your score dramatically if you miss a payment; amounts owed (30%) reflects credit utilization, so a balance near the limit can tighten pricing; length of credit history (15%) rewards long, stable accounts; new credit (10%) penalizes recent hard inquiries; and credit mix (10%) adds modest benefit for diverse accounts.

For example, a borrower with a 720 score but recent high utilization may see a rate increase because the utilization spike hurts the 30% 'amounts owed' portion.

Beyond the numeric value, lenders often run the score through proprietary risk thresholds; they may also review the underlying report for trends such as improving payment history or growing debt. Nevertheless, the FICO 5 number remains the primary gatekeeper before the next section explains how late payments and collections specifically drag it down. FICO score models guide lender decisions

Late payments and collections can knock dozens of points off your FICO 5.
They damage the payment‑history component, which carries the heaviest weight - 35% of the 300‑850 score range. The later the delinquency, the more recent the collection, and the greater the number of incidents, the larger the hit. Most negative items remain on the report for 7 years; a Chapter 7 bankruptcy stays for 10 years from filing, extending the damage.

• A 30‑day late payment may drop the score by 20‑30 points; 60‑day and 90‑day delinquencies can cost 40‑60 points each.
• Repeated late payments on the same account compound the effect, because the algorithm sees a pattern of risk.
• A charged‑off or collection account is treated as a severe delinquency and can subtract 100 points or more, especially if it appears within the past 12 months.
• The impact lessens as the item ages: a 5‑year‑old collection hurts far less than a 1‑year‑old one, though it still counts toward the 35% payment‑history weight.
• Any new collection after a recent late payment amplifies the penalty, because the model combines multiple negatives into a single 'risk score' for the factor.

Because payment history dominates the calculation, addressing late payments and collections yields the quickest score rebound before the next factor - new accounts and inquiries - comes into play. For a deeper dive, see FICO's official scoring model description.

New credit accounts and hard inquiries can lower your FICO Score 5, but the size of the dip depends on how many you open, how recent they are, and whether they are revolving or installment accounts. The 'new credit' factor makes up about 10 % of the overall 300‑850 range, so a fresh credit‑card or loan reduces the average age of your accounts and briefly hurts the mix of credit types, pulling the score down.

Hard inquiries also sit in the new‑credit bucket and typically shave a few points; multiple inquiries within a 45‑day window are treated as one, so the impact is limited. Soft pulls never affect the score. As the new accounts age, their negative effect fades, which you'll see reflected later when we discuss how long negative items stay on your FICO 5.

Negative items stay on your FICO 5 report for a set period, then they drop off and stop affecting the 300‑850 score.

• Late payments, collections, charge‑offs, repossessions, and unpaid tax liens  -  7 years from the first missed payment date.
• Chapter 7 bankruptcy  -  10 years from the filing date.
• Chapter 13 bankruptcy  -  7 years from the filing or discharge date.
• Civil judgments  -  up to 7 years (some states extend to 10) from the filing date.
• Paid tax liens  -  7 years after the lien is satisfied; unpaid liens can remain longer.

The quickest lifts come from targeting the three biggest weightings - payment history (35%), amounts owed (30%) and new credit (10%) - and from cleaning up any lingering negatives that still count.

1. Make every bill on time for at least 12 months
   A single on‑time payment can boost the 35 % payment‑history factor; after a year of clean payments most lenders see a 20‑30‑point jump.
2. Pay down revolving balances to under 30 % of each limit
   Reducing utilization from, say, 45 % to 20 % improves the 30 % amounts‑owed factor immediately; the effect shows on the next reporting cycle.
3. Add a small, low‑balance credit card and use it responsibly
   A new account that stays under 10 % utilization for six months lengthens the average‑age mix and can add 10‑20 points, because the 10 % new‑credit weight rewards fresh, positive activity.
4. Dispute any erroneous negative items older than 7 years
   Removing a misreported late payment or collection that's still on the record erases a drag on the 35 % payment‑history and 10 % new‑credit components; corrections typically reflect within 30 days.
5. Request a goodwill removal of a recent, isolated miss
   If you have a single 30‑day late that's less than a year old, a polite ask to the creditor can result in deletion; the removal often yields a 15‑25‑point rise because the most recent blemish carries outsized weight.

These actions hit the highest‑impact factors first, so you'll see the biggest score lift in the shortest time before the later sections discuss long‑term maintenance and how lenders interpret the improved FICO 5.

• Three real FICO 5 scenarios illustrate how the score reacts: a borrower with a 720 score misses a single 30‑day late payment; the 35 % payment‑history factor can lower the score by roughly 20 points, bringing it down to about 700, according to FICO's five‑factor model.
• Three new credit‑card accounts open within six months add two hard inquiries and increase the 'new credit' weight (10 %); the combined effect can shave 10‑15 points off a 680 score, while a drop in utilization from 30 % to 20 % (30 % amounts‑owed factor) may offset half of that loss, leaving the score near 660.
• A consumer with a 640 score files Chapter 7 bankruptcy three years ago; the public‑record factor (15 %) stays on the report for 10 years, so the score usually remains in the 600‑range despite recent on‑time payments, as most other negatives fade after seven years.

FICO Score 5 treats a thin file or no credit history as a lack of reliable data, so it assigns a modest baseline score that can be quickly shifted by new activity.

With no long‑standing accounts, the 35 % payment‑history weight defaults to 'insufficient,' forcing the model to rely on the 30 % amounts‑owed, 15 % length‑of‑credit, 10 % new‑credit, and 10 % types‑of‑credit components. The result is usually a score near the lower middle of the 300‑850 range.

For example, a borrower who opened a single credit‑card three months ago, has a $200 balance, and made one on‑time payment may see a FICO 5 score around 620. A person with zero tradelines at all may receive a score in the 300‑500 band, or may not receive a score until at least one tradeline reports. Adding a small, well‑managed installment loan or a rent‑payment reporting service can move the score upward by providing the missing payment‑history data, often lifting it 30‑50 points within a few months.

Because the model penalizes uncertainty, thin‑file consumers should focus on generating consistent, on‑time tradeline activity to give FICO 5 the data it needs to calculate a higher, more stable score.

You can identify a FICO Score 5 calculation by the lender's credit‑score disclosure or by direct confirmation from the lender.

1. Check the decision letter or online portal. Many lenders include a line such as 'Your score: 735 (FICO Score 5)' when you view the offer.
2. Ask the lender outright. Under the Equal Credit Opportunity Act, lenders must tell you which scoring model they used for mortgage, auto or credit‑card offers. A simple phone call or email will elicit a clear answer.
3. Consider the loan type. FHA and VA mortgages, most auto loans, and many first‑time‑buyer credit cards still default to FICO 5, so a product in those categories is a strong indicator.
4. Look at the application date. Prior to 2020, numerous banks applied FICO 5 to new‑credit‑card decisions; newer applications are more likely to use later versions.
5. Request the score report attached to your file. When a lender supplies a copy of the credit decision file, the accompanying score report names the exact model (e.g., 'FICO Score 5 version 8').

For a formal example of the required disclosure, see the Consumer Financial Protection Bureau's credit‑score disclosure guide.

FICO Score 5 uses the classic 300‑850 scale and weighs payment history 35%, amounts owed 30%, length of credit history 15%, new credit 10% and credit mix 10%; FICO 8 keeps the same scale but adds trended data, treats a single 30‑day miss less harshly, and still weights payment history 35% while shifting some emphasis to recent utilization;

FICO 9 further reduces the impact of medical debt, caps the effect of paid collections, and raises the weight of newer activity, so its payment‑history share drops slightly below 35% and fresh behavior counts more.

VantageScore also runs from 300 to 850 but flips the weighting: payment history 40%, depth of credit 21%, utilization 20%, balances 11% and recent behavior 5%; it treats rental and utility payments as credit lines, does not penalize a single late payment as strongly as any FICO version, and updates scores monthly instead of every 30 days.

Both sets of models still share the core principle that on‑time payments are the strongest driver, but the newer FICO versions and VantageScore give borrowers more room to recover from isolated setbacks.