Understanding Your Credit Score. You know how important your credit score is to your financial health, but do you know how your credit score gets calculated? There are five categories that make up your FICO® Score, the model that most lenders use. Knowing what gets calculated — and how — will help you understand how to keep your credit score healthy. Understanding Your FICO® Score. Payment History. Your payment history is the most important part of your credit score, comprising more than 1/3 your total credit score. Amount Owed. The amount of debt you owe represents 30% of your credit score. Less debt is better, in terms of a higher credit score. Length of Credit History. The length of time your accounts have been open and how long since the most recent action determines your credit history length. If you don’t have a credit history, you should begin using credit card – and never miss a payment. Credit Mix Currently in Use. The different types of credit (installment loans and/or revolving credit) that you are using makes up 10% of your FICO Score. New Credit. 10% of your credit score is made up of any new credit that you’ve recently taken on. Too much new credit could lower your credit score. The 3 Major Credit Bureaus. There are 3 major credit bureaus and each calculates their own score using FICO software. Your score may vary slightly from based on the information each bureau has. Credit Score Ranges from below 520 (worst) to 780-850 (Excellent). Credit Score Fast Facts. Married couples have separate FICO scores. You need a credit history before you have a credit score. It’s against the law to consider age, race, religion and national origin when determining credit score. What Damages Your Credit Score? Missed payments, Overspending using credit, Closing credit cards that have a positive credit history, Applying for credit too frequently, Relying only on one form of credit to build credit history. Negative Credit Score Items. How long do negative items impact your credit score? Inquires and credit checks effect your credit, up to 2 years. Charge-off Accounts, Closed Accounts, collection Accounts, Judgements, late Payments, tax Liens; up to 7 years. Bankruptcy up to 10 years. All Americans are entitled to one free credit report in every 12-month period from each of the three credit bureaus. Visit AnnualCreditReport.com to access your free report. Requesting your credit score can also be requested — but for a fee. TransUnion, Equifax and Experian logos is are registered trademarks of TransUnion, Equifax and Experian respectively.

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