Credit Score Guidelines
One of the most important factors in whether a lender will approve your application for a loan is your credit score. Knowing how your score is calculated can help you maximize your chances of being approved for loans or having access to other types of credit.
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The Facts
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Credit bureaus calculate your credit score using information found in your credit report, such as your credit history, the types of credit you have and how much you owe.
Misconceptions
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Even though personal and employment information is included in your credit report, they have no affect on your credit score.
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Factors
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The credit scoring model assigns different weights to different factors: 35 percent of your score is determined by your payment history; 30 percent by your outstanding balances; 15 percent by how long you've been using credit; and 10 percent each by your applications for new credit and the types of credit you've used.
Time Frame
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Your credit score takes into consideration your financial history from the past seven years, with a few exceptions. A Chapter 7 bankruptcy filing will affect your credit score for 10 years, while inquiries remain only for two years.
Considerations
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Each credit bureau collects your credit information independently, so some information may be found on one credit report but not others, which can lead to different credit scores.
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