How Is Your Credit Score Calculated?


If credit score calculations seem mysterious to you, you are not alone. The exact way to calculate credit score is a closely-guarded secret, but Fair Isaac, creator of the FICO score, has released some of the facts that are used to do the math. FICO evaluates the information on your credit report and assigns a credit score between 300 and 850 based on the following five criteria.

35% Payment History: Your history of paying your bills on time.

This includes: Number of collection accounts Late payments Number of accounts in good standing.

65% of your score is based on your credit history over the previous 2 years.

30% Amount owed: on your revolving and installment loans, including your credit utilization ratios on your credit cards.

15% Length of Credit History: The longer you have had credit the more established you appear. Keeping your accounts open as long as possible keeps your average age of accounts high, which will have a positive effect on your score.

10% Types of Credit Accounts: Having a good mix of different types of credit (i.e. Revolving, Installment and mortgage loans)

10% New Credit: New accounts and Hard inquiries
Always Check Your Score At Least Once Per Year
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