What is Your Credit Score

What is Your Credit Score?
Your credit score is a three-digit number created using an algorithm to rate the
information on your credit report. There are a few credit scoring models out
there, but creditors typically look at your FICO score. FICO scores range from
300 to 850. Anything above 750 is considered excellent. You want your score
to be anywhere from 700 to 850 to get the best interest rates for the credit you
need. Scores above 700 are good. Scores between 600 and 700 are fair, and
anything below 600 is not good.
When calculating your score, the payment history, amounts owed, length of
history, types of credit, and new credit matter. Personal and demographic
information is not applicable to the score.
Your payment history accounts for 35 percent of your score. This history
assesses your ability to pay on time, without creating delinquencies. Missed
payments and late payments lower your score.
The amount you owe for all your accounts counts for 30 percent of your score.
Companies look to see how much credit you have and how much you have used
on revolving credit accounts. If you have more than 50 percent of the credit
limit used on credit cards, your score will be lower.
The length of your credit history counts for 15 percent of the credit score and
assesses how long you have had credit accounts open and the account activity. credit pursuits, including the number of new accounts and credit inquiries that
have been made.
Some companies reporting to the credit agencies do so each month, but many
will report your history every three months. Typically, the average is taken for
those months, so if you make one late payment it may not appear, but if you
make two late payments, it will be recorded.
Certain types of credit count more than others, such as student loans and car
loans. Car loans are weighted more in your score than student loans. If you
walk into a car dealer with only student loans, four years of rent payments, and
low balance/low limit credit cards, you are seen as a person without a credit
history. Your scores may be in the 700s, but the interest rate will be higher than
someone with multiple credit cards, car loans, and a mortgage because you
lack credit.
The above factors are imperative for your understanding of repairing your
credit.
The score is evaluating if you consistently close and open new accounts or
keep accounts open for several years.
The types of credit you have are 10 percent of your credit score. The company
creating the score looks at revolving and installment accounts to determine if
you have a fair spread of both types of credit or tend towards one type.
New Credit is also 10 percent of your score. This part of the score views new

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