How Do They Calculate My Credit Score?

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The big credit score to care about is called your FICO® score. Three major credit bureaus — Experian, TransUnion and Equifax — use data from lenders and a few other sources to create your credit report and resulting credit score.

Here’s how that credit score is calculated:

  • Payment history (35%) — do you pay on time every time? Good!
  • Amounts owed (30%) — is your debt level low compared to what you have available? Good!
  • Length of credit history (15%) — have you managed credit well for a while? Good!
  • New credit applications (10%) — do you apply for credit sparingly? Good!
  • Type of credit (10%) — do you manage a mix of credit cards, retail cards and loans? Good!

Knowing which aspects of your credit behavior matter most, you can behave in ways that help your score rather than hurt it. Right?

What’s the deal with credit history?

Your credit history is a formal record of how you’ve handled the money you owe. Positive credit history gives you a better credit score, and makes it easier to borrow money. Awesome, right?

Three major credit bureaus — Experian, TransUnion and Equifax — use data from lenders and a few other sources to create your credit report and resulting credit score. New potential lenders look at these records to see if you’re a good credit risk.

That’s why no credit history is a problem, and negative credit history is worse. It can keep you from getting a loan. It can also make your auto insurance more expensive, stop you from renting an apartment, or even keep you from getting a job.

The good news is that your credit score isn’t a mystery, and you can work to improve it. Learn more about how it’s calculated. Find out your current score. Then, be sure to act in ways that help it rather than hurt it.

Tip: Get your free credit reports each year by visiting  annualcreditreport.com or calling (877) 322-8228. You can find out your FICO® credit score for a small fee.