What Goes into a Credit Score?

Behind the numbers

What numbers do the credit scoring companies crunch to come up with a credit score? Learning more about what factors influence the individual number can help you understand a credit score in the years to come.

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Knowing the Players
Credit scoring companies use information from the three national credit bureaus (Experian, Equifax, and TransUnion) to calculate consumer credit scores. Each company has developed statistical models allowing them to determine scores based on the information in a personal credit report.

About thirty individual factors can be used to determine a credit score. Certain factors, such as loan payment history, may carry more weight than other parts of one’s credit history. Indeed, it's important to remember that each person is different. A factor that may be important to one person’s score might be less important for someone else because of differences in each person’s credit past. Also, each factor's importance can change as a credit report changes and has new information added to it.

The breakdown
There are five general areas from consumer credit reports that credit scoring companies consider:

Payment history- Details about credit cards, installment loans (such as a car loan), mortgage loans, or finance company accounts are considered.

Outstanding debt- Total amount owed and the ratio of what's owed to one’s credit limit.

Credit history- How long has the consumer been building a credit history? How long have specific accounts been established and how long has the consumer used each account?

Pursuit of new credit- Applications for credit and the status of new accounts.

Types of credit in use- The numbers of accounts and the different types of accounts, such as bank cards, department store cards, and installment loans are all considered.