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.

 


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