What's Included in Your Score?

Credit Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below. The percentages in the chart reflect how important each of the categories is in determining your score.

These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit long - the importance of these categories may be somewhat different.

Payment History:

Amounts Owed:

Length of Credit History:

New Credit:

Types of Credit Used:

Please note that:

• Severity, recency, and frequency of delinquencies noted on trade lines within 24 months are a primary indicator of risk.
• With public records as with trade lines, the older and more isolated the occurrence, the less the risk.  Pay off old collection accounts and judgments at closing not before.
• A 30-day late payment that is only one month old indicates higher risk than a 30-day late made three(3) years ago.  "Past Dues" are killers.  Just paying off the past due amount without paying off the entire balance will have an immediate positive effect.
• Similarly, someone who has missed just a couple of payments in the last two (2) months, would be a higher risk than someone with much older more severe delinquency (provided other positive information is subsequently reported to the file).
• The number of sizable outstanding balances is predictive of risk, as is the proportion of those balances relative to the total credit limits.
• A score takes into consideration all these categories of information, not just one or two.
  No one piece of information or factor alone will determine your score.
• The importance of any factor depends on the overall information in your credit report.
  For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your score. Thus, it's impossible to say exactly how important any single factor is in determining your score - even the levels of importance shown here are for the general population, and will be different for different credit profiles. What's important is the mix of information, which varies from person to person, and for any one person over time.
• Your Credit score only looks at information in your credit report.
  However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.

Your score considers both positive and negative information in your credit report.
Late payments will lower your score, but establishing or re-establishing a good track record of making payments on time will raise your score.

How Mistakes Are Made:

When a credit report contains errors, it is often because the report is incomplete, or contains information about someone else. This typically happens because

• The person applied for credit under different names (Robert Jones, Bob Jones, etc.).
• Someone made a clerical error in reading or entering name or address information from a hand-written application.
• The person gave an inaccurate Social Security number, or the number was misread by the lender.
• Loan or credit card payments were inadvertently applied to the wrong account.

Click Here for the Glossary.

Continue by clicking on: What’s not included?

The information on this page and in this website is derived from sources that we believe are reliable. This information is not guaranteed.  We are not offering legal or accounting advice and suggest that you contact a lawyer and an accountant before taking any action.