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What is a Credit Score?
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- A credit score is an objective summary of your credit history that represents your credit
worthiness.
- Numerical weights are placed on specific aspects of your credit report and a
mathematical formula is applied.
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- A score is a number that tells the Lender how likely an individual is to repay a loan, or to
make credit payments on time.
- Although credit scores are not the only element used to make loan decisions, it can be
one of the greatest factors considered.
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How Your Credit Score is Determined |
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Payment History - About 35% of your score is based on this category, which includes:
- Payment information on all loans and accounts including on-time payments and late or
missed payments.
- Public records, including bankruptcies, judgments, and collection items.
- TIP: A good track record of on-time payments on multiple accounts will increase your
score.
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Amounts Owed – About 30% of Your Score |
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- This includes account balances, as well as the amounts owed on specific types of
accounts, such as credit cards, installment or mortgage loans.
- TIP: Having a very small balance without missing a payment shows that you have
managed credit responsibly and may score slightly better than no balance at all.
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Length of Credit History – Approximately 15% of Your Score |
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- Your score will take into account both the age of the oldest account and an average age
of all accounts.
- In general, a longer credit history will increase your score. However, people with shorter
credit histories may still have a great score depending on the overall credit.
- TIP: Keep your oldest account open, even if you are no longer using the account. This
will contribute positively to the length of your credit history.
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Types of Credit Used – About 10% of Your Score |
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- This includes the mix of accounts, including credit cards, installment loans, finance
company accounts and mortgage loans.
- TIP: It is not necessary to have one of each, however too many of one (i.e. credit card
accounts) could tip the scale. Do not open credit accounts you do not intend to use.
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New Credit – Approximately 10% of your score |
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- Your score will take into account how many new accounts you have as well as the length
of time since you opened a new account.
- In addition, the number of recent requests for credit, otherwise known as inquiries will
have an effect.
- TIP: Re-establishing credit and making payments on time after a period of late payment
behavior will help to raise a score over time.
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Equal Housing Lender. © 2008 Axiom Financial,
LLC 
