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Mysterious Factors Determine Your Credit Score

Pamela S. Stevens -- How to better understand the factors that determine your credit score and affect your getting an education, car, or home loan.

Like many complicated algorithms, the math used to determine your credit score is a kept a mystery. FICO or the Fair Isaac Company who created the algorithm that is used to determine your credit score keeps the actual algorithm under wraps. However, the information that is used to determine your credit score and the weight they affect your score is known.

The factors that determine your credit score by percent:

35% is payment history.

This includes whether you pay on time, you miss payments or have defaulted.

30% is the amount of your credit debt.

Your credit debt score includes your overall debt as well as how much credit is available to you. Generally, it is a good idea to keep your credit debt at 50% or less; for example if you have a credit card with a $1000 limit, try to keep the balance owed less than $500.

15% is the length (in time) of your lines of credit.

This criterion used to score credit has to do with how long your accounts have been open and how long it has been since there has been activity on those accounts. Generally, a few long term loans that have been paid regularly will help your credit score, a bunch of new loans with a short payment history will not.

10% is the number of recently opened accounts compared to total accounts.

This also includes the number of recent inquiries. Generally, it is assumed that many recent inquiries or new lines of credit may be a sign of you being in financial trouble. Sometimes it is easy to get quite a few inquiries if you are shopping around for a car or home loan; to help keep your credit score high, limit your credit "browsing" to less than six weeks.

10% is the type of credit.

Though items like a home loan are used to score credit, sometimes they carry less weight since they are a set amount per month and easy to maintain and predict. Often credit cards carry more weight in determining your credit score since the amount due per month can change and you can decide if you want to pay extra or pay off the balance. Since you have many choices when it comes to store cards and credit cards they use this information to determine your payment behavior.

In terms of the actual credit score, to obtain the best loans you want a score of 700 or more. Although many lenders will loan to you if you have a lower score, you will not receive the best terms and may be asked to put up collateral or have a co-signer.


Pamela Stevens currently writes content by contract. She has professional experience in the public and private sector, which has given her a broad writing base. She has authored over 1000 pages of online content and enjoys writing everything, including marketing or professional writing as well as poetry, plays, nonfiction and fiction. Her formal education includes a BS in Creative Writing from Weber State University. For more information on the wide world of credit, visit Credit Report Reviews.

© 2010 Pamela S. Stevens

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