5 Factors That Decide Your Credit Score

5 Factors That Decide Your Credit Score


Credit scores range between 200 and 800, with scores above 620 considered desirable
for obtaining a mortgage. The following factors affect your score:


1. Your payment history.
Did you pay your credit card obligations on time? If they were late, then how late?
Bankruptcy filing, liens, and collection activity also impact your history.


2. How much you owe. 
If you owe a great deal of money on numerous accounts, it can
indicate that you are overextended. However, it’s a good thing if you have a good
proportion of balances to total credit limits.


3. The length of your credit history.
In general, the longer you have had accounts opened, the better. The average consumer's oldest
obligation is 14 years old, indicating that he or she has been managing credit for some time, according
to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.


4. How much new credit you have.
New credit, either installment payments or new credit cards, are considered more
risky, even if you pay them promptly.


5. The types of credit you use.
Generally, it’s desirable to have more than one type of
credit — installment loans, credit cards, and a mortgage, for example.


For more on evaluating and understanding your credit score, visit  www.myfico.com.


Reprinted from REALTOR® Magazine (RealtorMag.Realtor.org) with permission of the NATIONAL ASSOCIATION OF REALTORS®.

Copyright 2008. All rights reserved.