Navy Federal | MakingCents: How Credit Scores are Calculated

How exactly is your credit score calculated? Well a lot of factors go into it. To determine your score different categories of information are
reviewed and compiled. The first thing lenders want to know is whether you’ve paid your loan and other bills on time. This is very important and according to It makes up 35 percent of your credit score. A strong payment history will likely increase your score when a high percentage of a person’s
available credit has been used this can indicate that the overextended and more
likely to miss a payment or pay late. Your credit score takes into account the
amount owed on all your accounts, the amount owed on different types of
accounts, whether you have low credit use, how many accounts have balances,
whether you’re maxing out your credit sources how much of an installment loan, like a
car loan, is still owed compared to the original loan amount. A longer credit history will increase
your score taking into account: how long you’ve had
credit accounts, including the age of your oldest account, the age of your
newest account, and the average age of all of your accounts, How long specific credit accounts have been established how long it’s been since you’ve used certain accounts Credit scores consider the types of credit you use: Your credit cards, retail accounts, installment loans finance company accounts, and mortgage loans. Having a wide variety of accounts
demonstrates you can handle all types of payment obligations. Opening several
credit accounts and short time span often shows greater risk especially if
your credit history is short. Finally even though creditors and credit bureaus are careful about the information they share mistakes do happen. If you keep track of your credit reports you can correct any mistakes before they could affect a
lender’s decision. For reference, equifax suggests a good credit score is 700 or higher. Now that you understand how your score is graded, you’re in good shape to make the financial decisions that lead to better credit scores and
lower interest rates.

2 comments on “Navy Federal | MakingCents: How Credit Scores are Calculated”

  1. Christian Huamani says:

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  2. Will U says:

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