Your credit score is a number that is calculated with a formula that lenders use to predict how much risk you are as a borrower. This score is one of the most important factors used when determining whether or not to lend you money and at what interest rate.
What’s In a Credit Score?
There are five categories that go into your credit score:- Payment History – 35%
- Total Amounts Owed – 30%
- Length of Credit History – 15%
- New Credit – 10%
- Type of Credit in Use – 10%
As you can see, the bulk of your credit score comes from your payment history and the total amounts that you owe. This means late payments and high balances have the greatest impact on your overall score.
