In general, your payment history will account for 35% of the
score, the amount of money you owe for 30%, the length of credit
history for 15%, and new credit and the types of credit will both
account for 10%.
The details of your payment history will include many different
account types including: credit cards, accounts with retailers,
installation loans like car payments, etc. All past payment problems
resulting in bankruptcies, wage attachments, judgments and liens
will play a negative role, and the most recent items will count
more than older ones.
How much you owe.
The second biggest factor influencing a credit score
is the amount of money you owe in relation to the credit available.
If a person is using most or all the credit available to them
it will have a negative impact on their credit score.
Accounts which were maxed out and are now paid down significantly
(or paid off completely) will count as positive items, showing
you can manage credit responsibly. Installment accounts, such
as car or personal loans which have been paid on time and are
already paid down to about half of the original amount, are very
good indicators for increasing the overall score.
Length of the credit history.
The longer the credit history, the higher the score. This part
considers not only how long ago you first established credit,
but also the last time you used your credit.
This part takes into account the information about both the
recent credit inquiries, and all new accounts you opened. It is
believed that if you had too many credit inquiries in the near
past it might indicate a problem. Similarly, having too many newly
opened accounts could be a sign of following a path of overspending.
The types of credit.
The overall mix of credit you have compares you with thousands
of others to assess whether it is a healthy credit picture.
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Information credit score does not take into account.
When applying for credit, you are always asked to disclose sources
of income and financial liabilities. A bank will want to know
the length of time you've been with your employer , if it's your
main source of income, and the monthly rent or apartment lease
payment, if you don’t own a home. This is probably the reason
why so many people think that this type of information has
influence on their credit score, but it does not.
Facts not considered in credit score calculation.
- any information related to credit counseling or debt management
- marital status.
- current employment status including title, salary, and how long
with the same employer.
- credit report inquiries made by you, employers, or banks if
made without your knowledge.
- where you live.
- interest rates which are charged on your loans,
credit cards, etc.
- public assistance being received.
- employment history.
- child or family support.
See also: credit
annual credit report,
Related topics: score