How credit score is calculated?

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Know accurately how credit scores are calculated and what really affect your credit score and how much.

Published in: Economy & Finance, Business
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How credit score is calculated?

  1. 1. How Credit Score is Calculated?
  2. 2. Credit score calculation Model
  3. 3. Payment History is 35%Payment historyhas the highestimpact on yourcredit report Advice : Pay your bills on time
  4. 4. Amount Owed/Debt to limit Ratio is 30%Lenders and credit bureaus lookat the amount of debt you owerelative to the amount ofavailable credit. Advice: Keep your credit balance low
  5. 5. Length of Credit History is 15%Short history is lookedat as a credit riskbecause there’s noproven record. Thereis no reason to everclose any accountbecause the longer theaccount is open themore it helps increaseyour score. Advice: Keep your old accounts open
  6. 6. Types of Credit Used is 10%Credit bureauslook at how manydifferent types ofcredit youcurrently use andhave used in thepast, such ascredit cards,mortgage, carloan, retailaccounts, etc. Advice: Manage different types of accounts.
  7. 7. New Credit is 10%Too many creditapplications mean thatyou are taking lot of debt& are in financial troubleAdvice: Don’tapply for multiplecredit lines.
  8. 8. Check your credit score on regular basis & Keep it high for a good financial life Info Source: www.Creditscore.com
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