What Is A Credit Score?
A credit score is a three-digit number that is auto-generated using the information in your credit report. It helps the lender to determine/predict the risk they have when they loan you money. Lenders will use your credit score to evaluate the probability of you paying back the loan amount.
What Goes Into Your Credit Score?
The data from your credit report is divided into five different categories: 1. Payment History - Your account payment information. This category accounts for 35% of your credit score and shows lenders whether you pay your bills and other obligations on time.
2. Amounts Owed - How much money you owe on your accounts. This category accounts for 30% of your credit score with consideration to the percentage of credit available to you that is being used.
3. Length Of Credit History - How long you’ve had the accounts open and the time since you’ve last used them. This category accounts for 15% of your credit score.
4. Types Of Credit You’ve Used - The types of accounts you have. This category accounts for 10% of your credit score and shows lenders whether you have a mixture of installment credit like mortgage loans and revolving credit like credit cards.
5. New Credit - Your pursuit of new credit. This category accounts for 10% of your credit score.
Read More |