Final answer:
The amount of debt owed has the biggest impact on a person's FICO score, influencing lenders' decisions and affecting interest rates and loan payments. While other factors play a role, managing debt and making payments on time remains crucial for maintaining a good credit score.
Step-by-step explanation:
The biggest impact on a person's FICO score is the amount of debt owed. This is part of a category known as 'amounts owed' and carries a significant weight in calculating the credit score. Lenders utilize this score to make a fair credit decision, not influenced by personal details such as race, gender, or religion. While credit history length, types of credit used, and new credit obtained are also factors, they carry less weight compared to the total amount of debt a person has. Ensuring that debt is manageable and payments are made promptly helps in maintaining a healthy credit score, which is critical for economic success and for making large purchases, such as an automobile, using credit.
Having a good credit score means that lenders will see you as a lower risk, potentially offering better interest rates, leading to lower monthly payments for loans. Remember, a bad credit score is not permanent; responsible financial habits can improve it over time, impacting your education and career goals positively by enabling better economic opportunities.