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Tuesday, July 8, 2014

What is a Credit Score?

What is A Credit Score?

A FICO score is a number between 300-850, which lenders use to determine your credit standing.  YourFICO score is a snapshot of your credit history at the particular time.  There are five areas in your credit score calculations that range from most important to least important:

35% = Payment History
30% = Amount Owed
15% = Length of Credit History
15% = New Credit
5%   = Inquiries

The factor that can boost your credit rating the most is having a past that shows you pay off your debts fairly quickly.  Most importantly, maintain low levels of your debt (or do not keep high balances on your credit cards or other lines of credit).  Having a credit history of two years or more, and refraining from constantly applying for additional credit will help your credit score.  There are four categories, which represent what your credit score rating is:

Excellent    = 700-850

Good          = 680-699
Average      = 640-679
Poor           = 300-639

Keep this in mind, paying off all of your debts or not having any debts at all can hurt you more then it can help you!  Having a positive payment history for two years or more is ideal.  If you have had poor credit performances in the past, your credit score does not let that haunt you.  Credit problems fade as time passes and as recent good payment patterns show up on your credit report. 

Posted By Wanda Strickfaden

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