Understanding Credit Scoring

Credit scores can be confusing. There are multiple different scoring models, along with three major credit reporting agencies. However, FICO is the most commonly used system, generating a score of 300 to 850.

The two biggest impacts on your credit score are:

• How regularly you pay your debts on time, which accounts for 35% of your score
• How much of your available credit you’ve tapped, which accounts for 30% of the total calculation

In other words, these two factors comprise almost two-thirds of your score.

Weighted less heavily but still important are how long you’ve had a credit history (longer is better), how many times you’ve applied for new credit in the last 12 months (fewer is better), and whether or not you show a mix of credit types (variety is good). 

https://www.investopedia.com/average-credit-scores-by-race-5214521

 

 

Access all 3 credit bureaus for FREE every year at

www.annualcreditreport.com

If you are seeking to learn more about credit, Contact Us for a one-on-one consultation. Our goal is to empower you with information. And knowledge is the key to power.