Your Credit Score?
During this day and age your credit score is very important. How exactly is it determined? What is a good and what is a bad score? How can you improve it?
Fair Isaac Corporation (better known as FICO) was the first company to put credit-worthiness into a readable number ranging from 300-850, 850 being great and 300 being not so much. They draw their formula from the 3 credit bureaus who pay FICO a small royalty to put it into the formula. The variations of the 3 scores can vary by 50 points.
Put basically, your credit score is how well you manage your debt. This is broken down into many different parts. The first part is simply your payment history, or how often you are late with your payments. This is 35% of your score. Total debt is the next. What percentage of your allowed debt are you using? Being above 50% is bad and it’s recommended you use around 10%. This is 30% of the credit score. Duration is next at 15%. The longer you have your card the better. The next is new credit at 10%. Requesting new credit also hurts your score. Last is types of credit at 10%. Having revolving or short term accounts such as credit cards help more than longer ones such as student loans.
An interesting article in Reader’s Digest offers many helpful ways to increase your score. http://www.rd.com/money/your-credit-score-the-magic-money-number-explained/2/