If you have ever wandered how the credit bureaus come up with your credit score you are not alone. You may have heard about how certain actions or behaviors, like being late with a credit card payment or having too many cards in your wallet, can negatively affect scores. But, thats only a small piece of the puzzle. There is, in fact, a formula that makes up a credit score. The term FICO stands for “Fair Isaac Company,” the company that originally developed the credit scoring methodology. While the exact percentages and breakdown is a tightly guarded trade secret, there are some general guidelines that give weight to several factors. Listed below are the financial behaviors and related factors along with the percentage weighting that each contributes to an overall credit score: * 35 percent - An individuals history of making credit payments on time
* 30 percent - The total amount of debt being carried along with available credit
* 15 percent - The age of an individuals open credit lines (more history is better)
* 10 percent - The frequency with which someone applies for new credit
* 10 percent - Wild card factors such as the types of credit lines In general, most of the factors that influence credit scores are within the power of consumers to change for the better. All it takes is a consistent dose of financial self-discipline to always make payments on time, not carry too much debt on any one credit card, dont close older accounts unless absolutely necessary and use discretion when applying for new credit. If you are curious about your current credit score, you can contact us and we can get it for you, free of charge. If you would like more information, fill out the form on the right hand side of your screen! >>
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