How do you calculate the score?
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How do you calculate the score?
There are hundreds of slightly different credit scoring formulas developed for specific business purposes. A credit score developed for auto loans is slightly different from a credit score developed for insurance. The most common credit scoring systems use a formula close to this:
* History of payments, including any late payments you've ever made, represents 35 percent of your credit score.
* Total amount of debt -- credit cards, installment loans, lines of credit and mortgages -- is 30 percent of your credit score.
* Length of your credit history, or how long you have been successfully borrowing money, is 15 percent of your credit score.
* The types of credit you use: credit cards, installment loans, etc., represents 10 percent of your credit score.
* The number of recent inquiries made on your report by lenders is 10 percent of your score.
| Guru Spotlight |
| Jerry Mayo |
