What’s a credit score?
Your credit score is determined by a super secret mathematical formula and attempts to give creditors and lenders an idea of how financially responsible you are. There are several different scoring formulas, the most well-known being from the three credit bureaus (Experian, Equifax and Transunion) and FICO. Each formula is different, but are all based on five main things: • Payment History: How reliably you pay your bills on time. • Amounts Owed: How much you owe compared to how much credit is available to you. • Length of Credit History: How long you’ve had loans and credit cards. • New Credit: How many new accounts you’ve opened recently. • Types of Credit in Use: The variety of accounts you have open, including credit cards, retail credit cards, installment loans (like student loans) and home loans.
