Understanding Your Credit Score Information
Credit score info allows lenders in order to gauge a credit candidate if he or she is worth the chance of availing credit. After all, credit establishments are into a company and would want to make money from their investments in terms of lending their money resources. It is just fair which they try to lend it to people who are responsible enough to pay it well later on.
Lenders and also credit institutions try to evaluate each credit application simply by looking at the applicant’s credit report information. Through it, these institutions can determine if an applicant may be worth the risk. The credit score is obtained from info that is based on past credit activities of the consumer as well as other related details. All these can be found on the applicant’s credit report.
The credit score is calculated base don the many information contained in the credit report. Different factors come into play each time a credit score is determined. A designed formula is used by credit reporting agencies to come up with the particular credit score. The method takes into account the information from your credit report, both the pros and cons entries to come up with the right score.
In order for this kind of score to be determined, the credit report need to at least have one account for at least half a year as well as one that continues to be updated for the same period. This will ensure that there is enough recent info in the credit report from which to base their computations.
Payment history accounts for about 35 percent from the credit score. This includes promptly payments as well as past due one which is considered when calculating the credit score. Public records that discover its way into the actual credit report such as amount you are behind payments, bankruptcies, lawsuits, etc. may also be considered when computing for the credit score.
The amount of credit that you’ve availed in the past accounts for about 30 percent of the credit score. Not only is the total amount viewed but also the amount borrowed coming from different accounts. The particular balances on particular accounts may also modify the credit score. Maintaining a little balance for example, may have a positive effect on the particular credit report and may help to keep your credit score upwards.
The length of your credit history makes up about 15 percent of your credit rating. Your oldest account and the average age of your other accounts are taken into consideration any time computing for your credit score. Also being considered is the length of time that has passed since you have used certain accounts.
The number of new credits acquired account for about 10 % of your credit score. Including the length of time that has handed since you have exposed a new account. Additionally considered for this will be the number of credit requests you have made in a one 12 months period. Credit report questions from lenders will also be taken into account when computing for your credit score.
The types of credit that you have availed accounts for 10 percent of the credit report information that switches into the calculation of the credit reporting agencies. Revolving credit in terms of credit card debts along with installment credit in terms of unsecured loans and mortgages are usually taken into account when figuring out for your credit score.
The actual formulas used are usually proprietary tools employed by the different credit reporting companies in calculating for the credit score. But pretty much, this is how the information within the credit report is used to generate a viable credit report to assess your credit danger.