Credit Score: How is It Calculated
Author: Ira Stoller
Posted: Fri Jul 02, 2004 7:05 am
Post subject: Credit Score: How is It Calculated
6/27/2002 9:50 pm CDT
Here's an short but informative article from, of all places, the AAA Travel Newsletter. It feels like it was chopped off at the end, but for what it's worth, here it is:
CREDIT SCORE, AN INSIGHT INTO YOUR FINANCIAL HEALTH
When making a decision about a loan, lenders want to know how you manage your debt, and most use credit score to determine that.
A credit score gives an instant picture of your history and takes five things into consideration, says Craig Watts, consumer affairs manager for Fair, Isaac.
1. Payment history. This makes up 35% of your score. Consistency of on-time payments is most important to your score, Watts says.
2. Amount owed (30%). Lower credit balances suggest that you're a better credit manager.
3. Length of credit history (15%). A longer credit history in good standing will raise your score.
4. Types of credit in use (10%). Some lenders want to know if you've had experience with different credit like revolving (a credit card) and installment (mortgage, auto loan).
5. Pursuit of new credit (10%) Lenders wnat to be sure you'll be able to pay them back, a proposition that could be considered iffy if you're applying for several loans at the same time.
Perhaps the most well known credit score is FICO, developed by Fair, Isaac. FICO has a range of 300-850. Most people have good credit scores, according to Watts, since the national average is 720. Still, lenders views "good" scores differently. (You can always ask your lender about the criteria for a credit product that interests you.)
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Posted: Fri Jul 02, 2004 7:05 am
Post subject: Credit Score: How is It Calculated
6/27/2002 9:50 pm CDT
Here's an short but informative article from, of all places, the AAA Travel Newsletter. It feels like it was chopped off at the end, but for what it's worth, here it is:
CREDIT SCORE, AN INSIGHT INTO YOUR FINANCIAL HEALTH
When making a decision about a loan, lenders want to know how you manage your debt, and most use credit score to determine that.
A credit score gives an instant picture of your history and takes five things into consideration, says Craig Watts, consumer affairs manager for Fair, Isaac.
1. Payment history. This makes up 35% of your score. Consistency of on-time payments is most important to your score, Watts says.
2. Amount owed (30%). Lower credit balances suggest that you're a better credit manager.
3. Length of credit history (15%). A longer credit history in good standing will raise your score.
4. Types of credit in use (10%). Some lenders want to know if you've had experience with different credit like revolving (a credit card) and installment (mortgage, auto loan).
5. Pursuit of new credit (10%) Lenders wnat to be sure you'll be able to pay them back, a proposition that could be considered iffy if you're applying for several loans at the same time.
Perhaps the most well known credit score is FICO, developed by Fair, Isaac. FICO has a range of 300-850. Most people have good credit scores, according to Watts, since the national average is 720. Still, lenders views "good" scores differently. (You can always ask your lender about the criteria for a credit product that interests you.)
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
posted by CardRatings.com at 12:11 PM
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