Credit Score Calculations
January 6, 2008
The FICO (Fair Isaac & Co.) credit score calculations consider the following factors:
Your payment history 35% : Do you pay your bills on time? Have you ever been delinquent, or are you consistently late? How about collection notices and bankruptcy? The answer to these questions account for about 35% of your credit score.
Total debt : How much do you owe lenders compared to the total amount you can borrow impacts about 30% of your credit score. If your credit cards are close to being maxed out, it may indicate looming financial problems and a possibility of default and it drops your credit core.
Length of credit history: Approximately 15% of your credit score calculation depends on how long you have had your accounts? Three days, six months, ten years? The longer credit history has a positive impact on your credit score.
Taking on more debt: Are you taking on more new debts? Even applying for too many new cards too quickly may be considered as financial difficulty and impacts your credit score in a negative way. This builds about 10% of your credit score.
Types of credit in use: About 10% of your credit score depends on the type of credit mix you have. High ratio of credit cards and installments loans in relationship to mortgages has a negative impact on your credit score.
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