Credit Scoring
Credit Scoring
The first thing you need to know about credit scoring is that you do not have a single score, there are three primary scores from the three credit reporting bureaus. Credit scores are designed to be an overview of your financial history and show potential lenders the probability of your ability to pay back a loan. New information is being constantly added to your report, and old information is being removed, the constant flow of changes continuously changes your credit score. A credit score can range from 300 and 85. If your credit score is a 300, it show lenders that you are a high risk and the probability of you repaying them is slim to none and in the same respect if your credit score is 850 a potential lender knows that you will most likely pay them back on time and in full. . The credit score is calculated by looking at: your payment history, revolving credit, cash flow, past financial history, how long you have had credit, the type of credit accounts you have, how many open accounts you have, how many inquires are on your file as well as other financial transactions and history.
Factors that may hurt/help your credit score:
- The largest factor of your score is your payment history.
- The use of your revolving credit is also important.
- Another important factor is the length of your credit history.
- Your credit score accounts for the type of credit you have.
- New Credit covers about 10% of your score.
The credit elements as detailed is what determines your high or low credit score. especially if you are trying to restore your credit it can become overwhelming. Contact My Professionals for Free Consultation.