a person’s payment history remains to be one of the biggest determinants of their credit score
PHILADELPHIA (PRWEB) April 28, 2018
A consumer’s credit score is an important part of their finances that is why National Debt Relief shares how a score is determined by reporting bureaus. The article titled “How Is My Credit Score Determined?” released April 23, 2018, aims to help people understand their score better and be able to improve their finances in the process.
The article starts off by pointing out that there are a lot of consumers who are wondering how their credit scores are calculated. There are even some people who don’t realize that they have multiple scores. However, the article explains that the good news is that most lenders rely on their FICO score to compute for individual scores. This means that consumers have to understand the categories used and how they comprise their total score to have a better understanding of how their credit score is calculated.
The article starts off by explaining how a person’s payment history remains to be one of the biggest determinants of their credit score. The payment history of a person makes up 35% of their credit score making it an important factor in the computation. Consumers need to understand also that their payment history looks at several items. Apart from timely payments, it also studies several accounts from credit cards to auto loans, and even mortgage loans. It also considers public record against consumers such as judgments, liens, as well as bankruptcies.
The article also explains how credit utilization plays a big role taking up the next 30% of the computation. This refers to a person’s use of their available credit. The lower their credit utilization ratio is, the better it is for their score. The article shares that Creditors like to see a low utilization percentage, as this is an indication that consumers are not dependant on their credit cards to meet everyday expenses.
The length of their credit history also plays a crucial role in computing for a person’s credit score. This is 15% of their score. Though a lot of people believe they must have a credit for a long time in order to have a good report, it is not always the case. The article explains that having good credit over a long period is obviously a good thing, but people can establish a good credit history in a relatively short period by managing credit well.
To read the full article, click https://www.nationaldebtrelief.com/how-is-my-credit-score-determined/