This Article is About
credit score
major credit bureaus
credit risk
payment history
poor credit
credit rating
How Credit Score Rating Is Measured
Join 1000's of Authors at StreetArticles Today!

In most cases, the details of the credit score rating scale used by the most credit bureaus are closely guarded trade secrets. The secrets are shrouded within the guidelines of the companies that have built the scoring credit score rating scale.

Let me however say that, the best known and most widely used credit score rating scale model of the FICO judges your credit score on a credit score rating scale from 300 to 850.

This was developed by the Fair Isaac Corp, and it is in use by the major credit bureaus- even though with slight variations. Due to the complexity of statistical analysis used in credit score rating scale and also the scoring algorithms which are not publicly advisable, it is very difficult for you to measure your own credit score on a reliable credit score rating scale.

But, this is not to say that Fair Isaac general method for measuring your credit score is not reliable. It is a computer generated scoring method. With any credit score rating scale, you need to bear in mind that, certain factors are put into consideration to calculate a good credit score.

The first of these factors is your payment history. This counts for about 35% of your credit score. In fact, it is the most heavily weighted factor used in calculating your credit score. So, if you pay your bills on time, chances are that you will have had a positive influence on your score, while late or missed payments will negatively bring down your credit rating.

Your total credit and total debt count for about 30%. This factor tends to look at how much debt you have compared to the overall amount of credit you have on your account. Should you have all your accounts maxed out; you stand a poor credit risk. After all, this will mean that you are struggling to pay off your debt. If your account balance is too low, compared to your available credit, this aspect of risk analysis will improve your entire credit score.

These two factors are considered independently. In addition, people with too much of credit available stand a higher credit risk. But the sad issue is that bureaus do not actually specify what they consider excessive. So, my advice is that you should use your credit conservatively and keep your credit-to-debit limit ratio as low as possible.

Finally, the length of your positive credit history also plays a vital role among other factors, accounting for at least 15%. The longer you maintain your accounts in good standing; the better will be your credit score.

This credit score rating scale measures your ability to make a long-term commitment to your creditor and is responsible for making your payments. So, you should not apply for too many credits in a short period of time. After all, the number of new credits you apply for in recent time counts 10%.


Street Talk

No comments present
You May Also Like
What Does My Credit Score Mean?
OK, you’ve done your homework and obtained your credit report and FICO credit scores from the three major credit bureaus (Equifax, Experian, and TransUnion). You have all the data on your credit history and the three-digit credit score numbers. So what does it all mean? Let’s discuss how creditors view…
By: Ron Estel in  Finance  >  Credit   Jan 09, 2012  
0
  Likes: 6

Fix Your Credit Score - I Have My Credit Report What Next?
Once you obtain your credit report you will able to add, correct and delete any information which is incorrect, incomplete, remove negative account that are out of date or the result of identity theft, according to FACTA law. If you have a hard time understanding your credit report. Instruction and…
By: DJ. Cameron in  Finance  >  Credit Tips   Mar 06, 2012  
0
  Likes: 2

Restoring Your Credit Report And Rebuild Your Credit Score
It can take three to 12 months to restore your bad credit. However the time you spend restoring your credit it is well worth it and the benefits you reap are priceless. Since the applying for loans have become everyday more difficult to obtain not to mention credit cards. If…
By: DJ. Cameron in  Finance  >  Credit   Apr 18, 2012  
0
  Likes: 1

How to Fix My Bad Credit Score the Easy Way
Did you know that 1 in 4 credit reports contains errors or omissions? And if it goes undetected can hurt you financially. Think about this for a moment. If the studies are correct and statistics say that they are then that means 1 in 4 people have a bankruptcy that…
By: Jackie Anderson in  Finance  >  Credit   Jan 05, 2012  
0
  Likes: 2

Companies to Use to Check Your Credit Score
Knowing your credit score may come in handy for a lot of different reasons. Whether you’re trying to get a loan, or you’re trying to land a new job your credit score could affect it in either a negative or positive way. It is advised, that everyone check their credit…
By: Pammy Ewell in  Insurance  >  Personal Property   Oct 13, 2012  
2
  Likes: 2

Repair Credit Score - 5 Steps to A Healthy Credit Score
Good credit management practices that can help raise your credit score over time depends on how consistently you paying your bill on time, you keep your credit card balance low and apply for or open new accounts only as needed. Today we are going to learn 5 steps to a…
By: DJ. Cameron in  Finance  >  Credit Counseling   Mar 09, 2012  
0
  Likes: 2

Positive Credit Score - Understanding Your Credit Score
Having a Positive Credit Score is the most important thing you should strive to accomplish. So many people don’t know what a credit score is and how this affects greatly when buying a home, applying for credit card or renting an apartment. Credit score is what lenders, landlords, and utility…
By: DJ. Cameron in  Finance  >  Credit Counseling   Mar 05, 2012  
0
  Likes: 2

The New Dating Question Mark: What is Your Credit Score?
When people start dating someone new, they ask questions so that personality can be assessed and chemistry can be discovered. Sometimes opposites attract and make a love match. Sometimes people are almost mirror images of one another. The questions are usually light in the early going and then move to…
By: amie nogrady in  Relationships  >  Dating   Dec 30, 2012  
0
  Likes: 0

What Is A Credit Score?
Before we can answer the question, "What is a credit score?" and work toward learning how to improve credit scores, we must first define a few credit terms and understand their meanings from a creditor’s perspective. Credit is defined as the provision of money, goods, or services with the expectation…
By: Ron Estel in  Finance  >  Credit   Jan 16, 2012  
0
  Likes: 2

Credit Score And Sacramento Homes For Sale
Keep in mind that credit scores play a very important role when you are in the process of finding a house and lot in Sacramento region. You need to have a good credit rating if you want local banks to allow you to get a loan which you will be…
By: David Yaffee in  Real Estate  >  Buying   Jul 12, 2012  
0
  Likes: 1

How To Earn Swag Bucks
Call me addicted, but I just really like Swagbucks. What is Swagbucks you all may ask. Well, it's actually quite easy. First of all, my suggestion is to plainly check out the website. See what it's all about. I'm going to tell you how you can use it to your…
By: Eric15 in  Home Based Business  >  Network Marketing   Sep 20, 2013  
1
  Likes: 1

How To Raise Your Credit Score With These Simple But Effective Credit Tips
Many people across the nation share the problem of a negative credit score. Many of those people are seeking easy ways to increase their score so that they can qualify for better rates and bigger loans. This article is full of ways that you can improve your credit score easily.…
By: Darin Sewell in  Finance  >  Credit Tips   Nov 17, 2011  
0
  Likes: 1

These 3 Things Will Raise Your Credit Score
What is credit management? In short, checking your credit report at least every couple of months. By doing so, you are in essence monitoring the activities that determine what your credit score is and will be. And, consequently, how you are able to move through this world financially. The way…
By: Scott Oberholser in  Finance  >  Credit Tips   Sep 26, 2011  
0
  Likes: 2

How to Fix A Bad Credit Rating
Why credit is so important? I'll tell you why. Whether you want to buy your first house or whether you want to buy the house of your dreams you will need to be financially sound as you go through your life. In order to create a structure a strong financial…
By: Jackie Anderson in  Finance  >  Credit   Jan 08, 2012  
1
  Likes: 2

Facts About Declaring Yourself Bankrupt
You may ask, “why should you give thoughts to declaring yourself bankrupt?" The point is that people often end up in bankruptcy because they are not able to pay their debts. As a result, people find relief in filing for bankruptcy as it helps them get rid of their debt,…
By: Scott Newman in  Finance  >  Bankruptcy Personal   Dec 29, 2010  
0
  Likes: 0

Article Views: 4870    Report this Article