What is a credit score?

The most widely used credit scores are FICO scores, which were developed by Fair Isaac & Company, Inc. (and they're named after their inventor). Your FICO score is between 350 (high risk) and 850 (low risk).

 

 

 

 

FICO Score Breakdown

Payment History 35% Were Payments Made on time?   Amounts Owed on Accounts 30% Is the balance owed close to the limit?   Length of Credit History 15% How long have your accounts been open?   New Credit 10% How many new accounts have you opened?   Types of Credit Used 10% Mortgage, auto, consumer finance accounts, revolving and installment loans.
The above information is illustrative only. Your individual	circumstances will vary.

 

What is Not in Your Score?

• Your race, color, national origin, sex, age, marital status
• Your salary, occupation, title, employment information, or residence address
• Any interest rate being charged on your credit accounts
• Any items such as family/child support, rental agreements, credit counseling participation

What Can Affect Your Score?

• Late Payments - Pay your bills on time. If you have missed a payment - bring your account current as soon as possible.
• Credit History - When you payoff a debt or collection amount, or close an account, the credit reference will remain on your credit report for a minimum of seven years.
• High Balances - Keep outstanding balances low on credit cards and other "revolving" accounts.
• New Credit - If you are relatively new to using credit - don't open too many new accounts in a short period of time.

 

Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score.

Your credit report must contain at least one account which has been open for six months or more, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.