Key
Factors in Calculating a Credit Score
If you are working at improving your credit
score, you likely are also interested in what is involved
in calculating your credit score in the first instance. Through
this article, you are provided some basic and useful information
in regard to your credit score. Once you have this information
in hand, you will be in a better position of understanding
what you actually need to do to improve your credit score
today.
How Your Credit Score is Calculated
Your credit score, is based on your past,
more than anything else. At the outset, your credit history
is considered and reviewed. From this review, that all-important
number is assigned.
As an aside, you might want to know when
the credit score system was developed. The credit score system
widely in use was developed in the 1980s through a joint effort
by the three major credit bureaus; Equifax, TransUnion, and
Experian.
The final score is based on how long you
have had credit as well as what types of credit, your payment
history and if you have had any late payments, and existing
loans or credit and the status of those accounts. Although
employment and wages play a big role in extending credit,
these items—plus a few others—determine your credit
score.
From your history, your credit score will
be assigned. Potential creditors will use the report and score,
wages, job history, and other financial issues to determine
your credit rating and whether you can handle more credit
or loans. If they determine that you can, your credit score
is often used to determine your interest rate and type of
credit you will get.
General Credit Score Statistics
In order to better understand your credit
score, it can be helpful for you to see how your credit score
matches up with the credit score of other men and women.
Score |
Population |
Rate
of Delinquency |
300 to 499 |
1% |
87% |
500 to 549 |
5% |
71% |
550 to 599 |
7% |
51% |
600 to 649 |
11% |
31% |
650 to 699 |
16% |
15% |
700 to 749 |
20% |
5% |
749 to 799 |
29% |
2% |
800 and up |
11% |
1% |
|