Here Is How Your Credit Score Is Compiled…

Good Morning!

I wanted to give you a quick break down of how your credit score is calculated by the credit bureaus…

35% – Payment history

The credit bureaus  look at your payment history on all your accounts; the length of your positive credit history and how long you have gone without a negative item; whether there are any severe unpaid debts like bankruptcies or foreclosures; and the number and severity of delinquencies in your credit history.

30% – Amounts Owed

Too many credit accounts and a high ratio of credit balances to credit limits can affect your score. Also affecting your score is the amount of debt on each account and the level of debt paid off on term accounts.

15% – Length of Credit History

Longer credit histories result in higher scores. Important factors incorporated into credit scores are: length of credit history, length of time specific accounts have been open, and the duration of time since each account was last used.

10% – New Credit

Credit scores track consumers who suddenly take on new debt and potentially overextend themselves, by checking to see when the last time a consumer opened an account and how many accounts were opened and by looking at the number of inquires on the consumer’s credit reports.

10% – Types of Credit Used

The type of credit you have plays an important role in determining your credit score. A “healthy mix” of installment loans (mortgage payment, auto loan) and revolving credit from banks is considered better for your score.

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That’s it for today!

Thank you for reading my email – and have a great week!

Brett