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as of September 22, 2014
How is a credit score calculated?
- History of payments: Approximately 35 percent of a credit score involves your history of credit payments. Things like late payment or bankruptcies would negatively affect your credit score.
- Your accounts outstanding: The amount that you owe on all your accounts, the available credit that you are currently using and your accounts with balances would comprise about 30 percent of your score.
- The span of your credit history: The longer it is the better your chances of scoring high. It makes up about 15 percent of the credit score. However, you may get a reasonably high score even if your credit history is short, provided it reflects good credit management.
- Credit that you recently applied for: This would make up about 10 percent of your score. In case of a number of fresh credit applications your score may be affected negatively. So you should be careful and focus the credit rate shopping in a short period of time, say 30 days, to avoid getting lower scores.
- Other factors: This would make up the rest of the 10 percent of the score. Having a mix of credit alternatives will help your credit score.