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How Your Credit Score is Calculated

by Feb 21, 2022Credit Score0 comments

How your Credit Score is calculated is a great mystery for many, but here we break it down and answer, “What does all this mean?”

1 – Payment history (35%) – This is how often you pay on time. Pay a bill late. This is dropping your score by 35%.

2 – Amounts owed (30%) – Think debt to limit ratio on this one – How high are the balances on your accounts compared to the credit limit? We advise you to keep your balances at 30% or below the credit limit, ideally in the 10% range.

3 – Length of credit history (15%) – This is how long you’ve had accounts open. Never close an account. The longer time you can show that you have good credit behaviors is beneficial.

4- New Credit (10%)- This is credit inquiries or applications for new credit (car shopping, credit cards, home buying). Do this too much – your score will drop 10%.

5- Types of credit used (10%) – This one is pretty straightforward – this means that you have a variety of credit accounts open. An installment loan, a mortgage, a revolving card, and a student loan vs. all credit card accounts.

If you have numbers 1 & 2 under control, you should look at the bottom number 3 factors. 

  • Number 3 Length of Credit History – you need time, so there is not a quick way for this to affect your score. Just stay current, and don’t close accounts. Over time you will see a reward here. 
  • Number 4 New Credit – this is easy to get under control. Most people look at their credit score in preparation for a significant purchase. Until you have reached your goal – any other credit applications are unnecessary. So until you’ve reached your score goal- don’t apply for any lines of credit.

Have any more questions about how Your Credit Score is Calculated? Feel free to contact us!

Credit Repair

Best Credit RX improves your credit score. Get a credit check. We are a credit repair company. If you are looking for the best way to repair your credit, starting with a copy of your credit report is your first step. We recommend using Best Credit Rx. We are a national company. We provide a free credit report, a copy of your credit score, or information about bankruptcy, credit repair, or identity theft. We can help you understand all these items:

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We can even help you get approved for a mortgage. Best Credit Rx is an expert about the credit bureaus and credit scores (Experian, Transunion, Equifax, Innovis). Best Credit RX can help you resolve all your issues.

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