How is Your Credit Score Computed?
Certain information is found in your credit report. This information falls roughly into these basic areas, which are listed below in order of importance.
1. Payment History
Does your credit report show frequent late payments, judgments or bankruptcy? Are there derogatory notes such as charge-offs? Have accounts been turned over to collections?
2. Outstanding Debt
How many outstanding balances appear on your credit report?
3. What is the average balance?
What is the ratio of total balances to total credit limits on revolving debt (i.e. credit cards)?
4. Credit History
How long have you had your oldest account?
5. Pursuit of new credit
How many inquiries and new accounts does your report show, and how recent are they?
How long has it been since the most recent inquiry?
6. Types of credit in use
How many accounts are reported in the different credit card categories such as bank cards, travel and entertainment cards, department store cards, installment loans and so on.
When each credit score is generated, the credit bureau also creates a list of the most significant reasons why
the score was not better.
Those reasons can include:
-- Account payment history is too new to rate
-- Amount owed on accounts is too high
-- Amount owed on revolving accounts is too high
-- Amount past due on accounts
-- Date of last inquiry too recent
-- Delinquency on accounts
-- Lack of recent bank revolving information
-- Lack of recent installment loan information
-- Lack of recent revolving account information
-- Length of credit history is too short
-- Length of revolving credit history is too short
-- No recent bankcard balances
-- No recent non-mortgage balance information
-- No recent revolving balances
-- Number of accounts with delinquency
-- Number of bank revolving or other revolving accounts
-- Number of established accounts
-- Proportion of balances to credit limits is too high on revolving accounts
-- Proportion of loan balances to loan amounts is too high
-- Serious delinquency, derogatory public record, or collection
-- Time since delinquency is too recent or unknown
-- Time since derogatory public record or collection is too recent