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Los Angeles Bankruptcy Lawyers / Blog / Credit / How Is My Credit Score Calculated?

How Is My Credit Score Calculated?

Most people have heard of credit scores and realize how they can effect a person’s life. But, many people do not understand how a credit score is actually calculated. To help, we have broken down what makes up a person’s credit score.

1. 30% of Your Score= Amounts Owed

  • This takes into account how much money you owe and is based on the percentage of your used credit in relation to your available credit.

2. 35% of Your Score= Payment History

  • This takes into account whether you have paid past accounts on time and can include payments on the following:
    • Credit cards
    • Retail accounts
    • Installment loans
    • Mortgage loans
    • Finance company accounts

3. 15% of Your Score= Length of Credit History

  • This takes into account how long you have had credit history. Generally, a person with longer credit history will accumulate more points in this area. However, a person with less credit history can also achieve a great amount of points in this area. This area can be based on the following factors.
    • How long certain credit accounts have existed
    • The length of time since you have used the various accounts

4. 10% of Your Score= New Credit

  • This takes into account how many new credit accounts a person opens in a certain amount of time. This can negatively affect a person’s credit score if that person does not have a long credit history.

5. 10% of Your Score= Credit Mix

  • This takes into account a person’s mix of credit cards, retail accounts, finance company accounts, mortgage loans, and installment loans. Keep in mind that a persons without credit cards will be viewed as higher risks that those who manage credit cards in a responsible manner.

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