What Determines Your Credit Score?

680, 783, 621.....How are these credit scores calculated?  There are 5 factors that determine credit score.  Here is a breakdown of each factor:

  1. Payment history (35%): What's your track record? Have you missed any payments? Have you made your payments on time?
  2. Amounts owed (30%): How close are you to maximizing your limit? Staying under 65% would not negatively affect your credit score.
  3. Length of credit score (15%): Having a credit card or line of credit for a long period of time helps establishing a good track record assuming no payments have been missed.
  4. New credit (10%): Are you applying for credit cards, retail store cards regularly? Are you applying with 5 lenders for a mortgage? Continuously looking for new credit is a negative.
  5. Types of credit (10%): Healthy mix of credit cards, retail accounts, lines of credit and car loan/lease.

For mortgage lenders, credit scores above 680 are considered excellent, there are cases where some lenders require a 700+ for self employed clients.  For a copy of "Understanding Credit Score" report which provides detailed information on improving and maintaining your credit score, please click here.