How Is a Credit Score Determined?

There are a few key things that go into making up your credit report. These factors are used to calculate your numerical credit score.

Your credit report is based on several factors that are reported by outside sources. You should be aware that your score is impacted by many different choices you make every day.


The Main Factors


  • Personal Information — This includes:
    • Name, addresses (past and current), telephone number, birth date.
    • Social security number.
    • Employment history.
    • This personal information does not include information about your race, religion or health history.
  • Credit History — Your credit history includes:
    • Bill-paying history with banks, retail stores, finance companies, mortgage companies, and others who have granted you credit.
    • Information about each account you have, such as when it was opened, what type of account it is, how much credit it includes, what your monthly payment is, etc.
    • Account closures and loans that have been paid off.
    • If there were missed or late payments.
  • Public Records — This portion can include:
    • Tax liens, court judgments, and bankruptcies.
    • Public records that may show your ability to pay back a loan; this does not include criminal records or driving records.
  • Report Inquiries — This section includes:
    • All credit granters who have received a copy of your credit report.
    • Any others who were authorized to view it.
    • Lists of companies that have received your name and address in order to offer you credit are included. This is where all of those “pre-approved” credit card offers come from.


The Score Breakdown


  • 35 percent of the score is based on your payment history. A lender’s primary concern is whether or not you are going to pay back your loans. The score is affected by how many bills have been paid late, how many were sent out for collection, any bankruptcies, etc. Time is also a factor in this: the more recent the late payments, the more they will affect your overall score.
  • 30 percent of the score is based on outstanding debt. This how much you currently owe on other debts. These debts include your car or home loans, as well as any credit cards you may have carrying balances. A maxed out credit card will lower your score. The rule of thumb is to keep your card balances at 25 percent of their limits or less.
  • 15 percent of the score is based on the length of time you’ve had credit. This is because the more information there is about your credit history, the more accurate that information is going to be, so a longer credit history can mean a higher score.
  • 10 percent of the score is based on the number of inquiries on your report. If you’ve applied for a lot of credit cards or loans, you will have a lot of inquiries on your credit report. These might indicate hard financial times or too much debt to pay back, which can reflect negatively on your credit score. The more recent these inquiries are, the worse for your credit score.
  • 10 percent of the score is based on the types of credit you currently have. The number of loans and available credit from credit cards you have makes a difference. There is no magic number or combination of types of accounts that you shouldn’t have. These actually come more into play if there isn’t as much other information on your credit report on which to base the score.