Loans & Credit Scores : How Is My Credit Score Calculated?


Did you always wonder how they come up with
your credit score? Hi I’m Carrie Kukuda the Some Day Coach. I’ll give you some tips on
how to calculate your credit score. It is kind of like a pie chart. You get a little
percentage for each and everything that they consider. The first thing they consider is
your payment history. They want to know if you are paying in full, if you are paying
on time and if you are paying, if you have lates, if you have missed payments, all those
type of things that they are looking for and that percentage is 35% and the next thing
down is your total debts. It looks at how much you owe. It looks at your total volume
of how much you owe with all the different things that are sitting on your credit report
and that weight is 30% and then they look at the types of debts that you have. You want
to have a good mix. That only weighs about 10% of your score but it is a good mix. So
you want to say you have a mortgage, say you have a credit card or two and an auto loan
and that is what they are kind of looking for is the mix on your debt. The duration
of your credit history, that is very important. You want, some mistakes is that you want to
close as much as you can and the credit score is going to go up. It is kind of a misconception.
You want to keep those credit cards open. You don’t necessarily have to use that credit
but leave it open so that your credit history has a longer time frame so if you have had
one for ten years leave it open. You don’t have to use it but it will give you that little
bit of a boost in your credit score and that will weight in at about 15% on the pie chart.
And last but not least is how much new credit you have been assuming and that’s about 10%
so it does take into account any of the new credit that you add on to your debt so that
is just a little bit to give you an idea of how they calculate your score and everybody
is different but that is how it is laid out. Again my name is Carrie and thank you.

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