Credit Score Calculation demystified! 5 Factors that affect your credit score

    Do you know your credit score?

    Your credit report is like a file on you and your credit history. It basically tells lenders how risky of a borrower you are. So when it comes time to purchasing your new home or new car, you want your credit report and credit score to be in top financial shape!

    Your credit report will include your personal information, a summary of your financial accounts and history, if you have filed for bankruptcy, and any inquiries that have been made from lenders. Then all of this information is calculated in a super fancy, complex formula to equate your credit score.

    You want to get in the habit of checking your credit score at least once per year. You can go to sites like freecreditreport.com to access your credit report for free once per year and then pay an additional fee to get your credit score. Other sites such as Credit Karma will allow you to access your credit score for free on a regular basis.

    So what goes into calculating your credit score? Well, there are 5 factors that contribute to the credit score and knowing what they are will make it easier to increase your credit score and creditworthiness. The five factors include:

    1. Payment History– i.e. Are you paying your bills on time? This accounts for about 35% of your score.

    2. Total Amount Owed– According to Mint.com, you should strive to keep your score healthy by using less than 30% of available credit across all your credit cards. This factor accounts for 30% of your score.

    3. Length of Credit History– This factor accounts for 15% of your score. Getting an early start on building credit is essential. I usually recommend parents to help their children open up a credit card starting in high school, and help them understand the importance of establishing and being responsible with their credit.

    4. New Credit– i.e. Number of recently opened accounts and credit inquires. This accounts for 10% of your score.

    5. Types of Credit Used– i.e. Car loan, mortgage, and credit cards. This accounts for 10% of your score.

    The goal is for your score to be above 760. This means you have excellent credit.

    Call to Action

    Request your credit report today by logging onto one of the three different credit reporting bureaus: Equifax, Experian, or TransUnion. Each one of them is required by law to give you one free credit report per year. You can also visit creditkarma.com to view your credit score for free on a regular basis. Having a good credit score is critical when building your financial future. For more information on how to build a better credit score visit LearnVest.

     

    Enjoying This Content? Sign Up Below For More!

    3 Comments

    • […] #split {}#single {}#splitalign {margin-left: auto; margin-right: auto;}#singlealign {margin-left: auto; margin-right: auto;}#splittitlebox {text-align: center;}#singletitlebox {text-align: center;}.linkboxtext {line-height: 1.4em;}.linkboxcontainer {padding: 7px 7px 7px 7px;background-color:#eeeeee;border-color:#000000;border-width:0px; border-style:solid;}.linkboxdisplay {padding: 7px 7px 7px 7px;}.linkboxdisplay td {text-align: center;}.linkboxdisplay a:link {text-decoration: none;}.linkboxdisplay a:hover {text-decoration: underline;} function opensingledropdown() { document.getElementById('singletablelinks').style.display = ''; document.getElementById('singlemouse').style.display = 'none'; } function closesingledropdown() { document.getElementById('singletablelinks').style.display = 'none'; document.getElementById('singlemouse').style.display = ''; } 3 More Things You Might Not Know About Credit ScoresHow To Fix Your Credit Score RatingGet Your Credit ReportHow To Benefit From An Unsecured Credit Cards For Bad CreditCredit Score Calculation demystified! 5 Factors that affect your credit score […]

    • […] to Fix an Error on Your Credit ReportCFPB Update: Supervising Credit Bureaus and Debt CollectorsCredit Score Calculation demystified! 5 Factors that affect your credit score noCon(document).ready(function(){ noCon("#dropmenu ul").css({display: "none"}); // For 1 Level […]

    • […] #split {}#single {}#splitalign {margin-left: auto; margin-right: auto;}#singlealign {margin-left: auto; margin-right: auto;}#splittitlebox {text-align: center;}#singletitlebox {text-align: center;}.linkboxtext {line-height: 1.4em;}.linkboxcontainer {padding: 7px 7px 7px 7px;background-color:#eeeeee;border-color:#000000;border-width:0px; border-style:solid;}.linkboxdisplay {padding: 7px 7px 7px 7px;}.linkboxdisplay td {text-align: center;}.linkboxdisplay a:link {text-decoration: none;}.linkboxdisplay a:hover {text-decoration: underline;} function opensingledropdown() { document.getElementById('singletablelinks').style.display = ''; document.getElementById('singlemouse').style.display = 'none'; } function closesingledropdown() { document.getElementById('singletablelinks').style.display = 'none'; document.getElementById('singlemouse').style.display = ''; } Maggie Valley Log Home Now Under $200,000! High Country Furnishings Negotiable!Planning an Adventurous Vacation DestinationBuena Vida Wellington Florida Homes For SaleHighlands, NC Real Estate – In-Town Joe Webb Log Cabin by Mirror Lake!Buyer (Aurora)Credit Score Calculation demystified! 5 Factors that affect your credit score […]

    Leave a Reply

    Your email address will not be published.

    Please complete equation (Are you a real person?) *
    Time limit is exhausted. Please reload CAPTCHA.

    Contact me to Schedule a Discovery Phone Session CONNECT NOW!