What Your Credit Score Is Made Of

Consumer credit reporting agencies compile the information in your credit report, but they do not share it unless your request. Without you requesting it, the credit bureaus are legally obliged to store the information and maintain it in their files. With a few key exceptions, they do not share information with each other. This means if you are having credit problems. If someone copies your credit report and finds the information relating to credit repair organization and bankruptcy, they can deploy this information for their gain. But for you it does not mean there is something wrong with you or that you are accredited because of your credit history.

Consumer reporting agencies compile the debt information provided to them by creditors into three major categories: debts owed by you, accounts in your name, and public records, such as lawsuits or debt collections. This information is used to determine your credit score. Different parts of your credit report determine your credit score from each other, based on how it is associated. Your credit score is calculated as follows: Your payment history represents 35% of the formula for your credit score. The amount of money you owe represents 30%, the length of your credit history represents 15%, types of credit you have represents 10%, new credit accounts and represents 10%, and the number of inquiries represents 10%. If a lender sees a lot of short credit history, called a short-term credit line, the lender may view this as risky. If there is a fair amount of long history for a parent for example, the lender will be more willing to give to a borrower with a substantial amount of credit extended. If a lender or creditor sees a lot of new credit accounts which they have not been recently extended in, as in a trade of cards, it could indicate that the lender is worried about recently gaining accounts. Your credit score will be from 300-850. If you have a credit score of over 700, you are seen as being very good and will get the best rates. If your score is over 680, then you may be seen as being a below average credit risk. Scores between 680 and 720 are still considered acceptable. If your score is under 620, you may have serious credit issues and will see to be offered rates for loans very favorable to the lender. If you want to raise your credit score, pay your bills on time and avoid foreclosures, repossessions or defaults on any of your debts. Delinquent items can stay in your credit file for years. If you show payment history, paying your bills on time, for several years, you will be able to reverse some of the negatives on your credit report.