Calculate Your Credit Score: How Do The Numbers Add UpLending institutions such as banks and credit card companies use a credit score to see the risk factors associated to a particular person. Studies show that borrowers who have a high credit score are less likely to default on any loans that they may have. But just who does calculate your credit score rating and what measures do they use. Credit reporting agencies calculate your credit score. They take the information which appears on your credit report and by keying it into their giant computers, have some software analyze the information. Once the computer finishes with its analysis, it spits out a number that lenders call your credit score. However, the three main credit reporting agencies do not use the same scoring software, so you may find that where you have a 700 credit score with Transunion, Experian might report a lower score. The most important parts of your credit history come from your credit report, and credit reporting agencies use this information to create your FICO credit score. They use these five bits of information from your credit history to get your credit score:
As you can see the most important part of any credit score calculation is your payment history information. Agencies estimate this part of the score by looking at the number of accounts you have and whether you are repaying as agreed. They also look to see if there are any negative items about payments on these particular accounts. They especially examine those items which are overdue and how long they have been delinquent, as well as looking at how long it has been since you had a late payment. The other big piece of your credit report history used to calculate your credit score is on the amounts you owe. They not only look at how much you owe on each of the accounts, but also the type, and balance in the respective accounts. As well as these things, they also review any revolving credit lines you have. Credit reporting agencies use this information to see whether you have more credit than you can afford. By taking these and other factors into consideration each credit reporting agency should be able to calculate your credit score rating effectively. A lender can then confidently use this score in deciding whether you are a good risk for more credit. Fico Score >> Privacy Policy >> Disclaimer >> Terms Of Use >> About Us >> Contact Us |