FIVE FACTORS THAT INFLUENCE YOUR CREDIT SCORE

WHAT MAKES UP YOUR CREDIT SCORE

What is a credit score? A credit score is a number assigned to a person that indicates to lenders their capacity to repay a loan. You also may hear it referred to as a FICO score. A FICO score is a person's credit score calculated with software from Fair Isaac Corporation that can range between 300 & 850. Each individual has their own credit score, unfortunately for most of us we find out too late what it is. Many people make the assumption that because they have never been late that they should have good credit. Then there are some who believe because they were approved for a loan or credit card that they also have good credit. However this is not always the case. We've compiled five factors that influence this all important and many times mysterious magic number.

35% of your score is influenced by account history (how timely you've paid)

30% to current account usage (how much of your credit is being used, with greater amounts being negative) which is that which you have actually used.

15% to length of credit history (the longer the better)

10% to new credit inquiries and accounts

10% to the "credit mix" or variety of credit types present. Below is a list of the most common credit types.

Mortgage - a loan obtained through the conveyance of property as security.

Auto - a loan to purchase an automobile.

Installment - credit that is obtained and paid for in equal installments. i.e. furniture account.

Revolving - credit that is automatically renewed as debts are paid off.


*All definitions are in part from The Finish Rich Dictionary except auto which is from wordnetweb.princeton.edu