How Is a Credit Score Determined?

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A credit score is determined by the amount of debt accrued, an individual's income and the frequency of timely payments. Understand how credit scores are calculated with information from a financial manager and currency trader in this free video on finance.

Part of the Video Series: Credit Information & Tips
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Video Transcript

I'm Roger Groh. We're here to talk about how a credit company determines your own credit score. Well, there are two parts to this. One is: Do you make your payments on time? Part of that is your responsibility to check your own credit score to be sure that they really know what you've done. You should be proud if you've made your payments on time and you need to be sure that that's accurately reflected. Part two is depending upon the sophistication of the credit reporting companies, they'll look at the debt that you have or maybe are thinking of assuming and they'll look at your income and they'll rate you depending upon whether they believe that you'll have enough income to borrow the money that you're thinking about borrowing. Now, those are much different products for much different types of customers, but they would make up perhaps ninety-five or even ninety-eight percent of the total borrowing market. That's how a credit score is determined. I'm Roger Groh.


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