How They Calculate Your Credit Score
To calculate credit score the following factors are taken into consideration in accordance to their percentage weight:
- Payment history (35 percent) – your payment history is the largest consideration when considering your credit score. How quickly you pay your bills is a chief concern of lenders.
- Amounts owed (30 percent) – the amount of personal debt that you have is the next consideration in calculating your credit score.
- Length of credit history (15 percent) – how long you have been borrowing and paying bills is the third most important factor.
- New credit and Types of credit used (10 percent each) – new or recent lines of credit established and how credit is used are the final considerations when calculating a credit score.
Fair Isaac Corporation (FICO)
These factors are used by the Fair Isaac Corporation of Minneapolis, Minnesota, which created the FICO score used to determine a consumer’s creditworthiness. The scores are based on a range of 300 to 850, with the median score for the United States of 723.
Student Loans
- 3 Factors that Contribute to Fluctuating Interest Rates on Student Loans
- What are the Consequences of Defaulting on a Federal Student Loan?
- What Happens when You Default on a Private Student Loan?
- Federal vs. Private: Comparing Student Loan Interest Rate
- Can You Get a Private Student Loan with No Cosigner?
