What is in a Credit Score?

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What’s in a Credit Score?

With a FICO based score, the higher the number, the better your score.
Score above 720 usually considered excellent
Score 850 is usually tops
Score 680 to 720 range are still quite good
Score 650 to 680 range aren’t terrible, but will carry higher rates
Below 650, you may have some trouble getting credit or be charged high rates

These are general rules of thumb, though, since every lender has different criteria.
Accordingly to Fair Isaac Company, 5 categories of information (along with their relative weightings) go into your credit score:

Payment history---------------------35%
Amounts you owe------------------30%
Length of credit history-----------15%
New credit-------------------------- 10%
Type of credit in use--------------- 10%

It’s obvious that your payment history is the most important factor in your score. But there are some finer points here that you may not be aware of:

Most lenders don’t report you as late to the credit bureaus until you fall behind by 30 days. (But they will often charge you a hefty late fee if you are just one hour late with your payment). This isn’t a hard and fast rule so always be sure to double check if you’re having trouble meeting the due date. Sometimes lenders will close your account or up your rate if you are chronically late, even by just a few days.
Recent late payments, even for small amounts, hurt your credit score significantly.
Late payments will generally remain for 7 years, even if you catch up on the account or pay off the bill.
All other things being equal, how many months you fell behind is more important than the amount. For examples, missing $20 minimum payment for 4 months in a row will probably impact your score more than missing a $300 car payment one time.

Account balances, however, play more of a role in a score than most people realize. It’s not uncommon to hear “I have excellent credit” from a consumer who has paid on time but has a ton of debt, and whose score is suffering as a result. There are several factors that will come into play in this evaluation:

How close you are to your limits on your revolving accounts such as credit cards and lines of credit. The closer you are to your limits, the worse it can be for the score
How much you owe on your total revolving lines of credit. Total up all your available revolving lines of credit and then total your outstanding balances. As you use 50% or more of your available credit on your revolving accounts, your score can start to suffer.
How much you owe compared to other consumer across the country

Source: The ABC’s of getting out of debt - Sutton, Garrett

What’s in a Credit Score?

Avoid Bankruptcy and Free Your Debt . Get Refinance Loans , Secured Debt Consolidation or Debt Settlement Advices.