How is a Credit Score Calculated?

The three credit reporting companies – TransUnion, Equifax and Experian provide scores to lenders. You score is calculated by a formula based on your credit history. Credit scores range between 350 and 800. Generally, a higher score, makes it easier to get loans and credit, and the lower the interest rate.

A personal credit score is calculated the following personal financial data:

Payment History: Approximately 35% of a credit score is based on bill payment habits (on time or overdue).
Amounts Owed: About 30% of your credit score is determined by the amount of money you owe.
Length of Credit History: 15% of a credit score is calculated on the length of your credit history.
New Credit: 10% of your credit score calculated on new financial credit activity (new accounts opened).
Types of Credit: 10% of your credit score is based on the different categories of credit used, such as auto payments, mortgages, credit card bills and personal loans.

With this knowledge you will be able to improve your credit score and maintain it over time.