Myths and Truth about Credit Scoring

Credit score is the cardinal factor determining approval of almost any type of credit. It is based on the information contained in your credit report files. The widely used FICO score was developed by Carnival Isaac Corporation, and it is a expression which assesses your possible credit risk.

The information used to cipher credit score can be broken down into five major parts. Your payment history with banks and other lenders will account for 35% of the score, the amount of money you owe for 30%, and the length of your credit history for 15%. New credit and a statistical appraisal of how healthy your credit premix is will both account for 10%.

Credit score is not based in any manner on the following information:

- mentions to debt management or credit counseling programs.
- person’s matrimonial status.
- current employment status, including how long with the same employer.
- credit report enquiries made by you, employers, insurance companies, or banks if made without your knowledge.
- what interest rates are charged on your credit cards, etc.
- public aid received.
- person’s age.
- kid or household support received.

You can increase your score by:

- always paying measures on time.
- paying off or reducing credit card and other debt.
- keeping old, fresh credit cards, sections shop cards and other “revolving” credit accounts open, even if you don’t usage them.
- not applying for credit very often.
- correcting errors on your credit reports.

Banks determinations are made according to their ain standards.

While the bulk of lenders utilize credit score as a cardinal factor in approving credit, other facts play their parts as well, among them: your income, employment status and length of clip at present address, to call a few. Each bank have its ain standards. What score is acceptable for a peculiar loan or credit merchandise depends solely on a lender. The person’s credit score might not be high adequate to get credit with one bank, and perfectly acceptable with another.

More about credit score and tips on improving your credit can be establish at: How Much? - Comparing financial products.