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What Makes Up Your Credit Score?

What Makes Up Your Credit Score? by STAFF WRITER
Published May 5, 2009
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Everyone has a credit score, but most do not know what goes into creating this magical number. How does your credit score stack up? Your credit score is a number used by all three credit reporting agencies in the United States based on the information each credit bureau has in your file. Each credit bureau will have different scores, even though calculated using the same formula, since your file varies with each credit reporting agency. The higher your score, the better. Higher scores equal lower risk to lenders. Better credit scores help with lending approvals and lower interest rates. VantageScore is the system created by the three credit bureaus (Equifax, Experian, TransUnion). The true calculations remain hidden from consumers, but the basics of what make up your credit score are available. Some lenders may not use Equifax, Experian, or TransUnion's credit score, but their own system, so a high credit score with Equifax, Experian, or TransUnion is not a guarentee that a particular lender will evaluate you the same as another lender.

Credit Score System

Credit scores range from 501 to 990 and are represented by the A, B, C, D and F letter grades. The lower the risk to the lender, the better since lower risk implies your likelihood of repaying a debt is better than someone with a lower credit score .

Credit Score Ranges

  • 901 - 990 = A (very low-risk)
  • 801 - 900 = B (low-risk)
  • 701 - 800 = C (medium-risk)
  • 601 - 700 = D (high-risk)
  • 501 - 600 = F (very high-risk)

Breakdown of what makes up your credit score

  • 32% - Payment History is how timely and consistently you pay your bills.
  • 23% - Utilization is the amount of used credit from your available credit.
  • 15% - Amount of Debt is how much debt you owe.
  • 13% - Length of your credit history, including types of credit and how many open accounts you have.
  • 10% - New Credit is comprised of the number of recently opened accounts and credit inquiries.
  • 7% - Available Credit is the total amount of credit you have.

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