Understanding Your Credit Score
Your credit score, often referred to as your FICO score, is a statistical interpretation of the information portrayed through your credit file. Lenders use the information to estimate the probability you will back a loan on time. The higher your credit score, the higher the probability that you are worthy to be granted credit in the marketplace.
The median or average credit score for borrowers in the United States is 723. If yours is below average, the key is understanding how credit scores are calculated.
How is it calculated?
Credit Score is calculated into 3 parts:
- 35% is payment history (making payments on time)
- 35% Debt to Income Ratio (debt compared to annual income)
- 30% is how many accounts you have open and how high the balances are
How can I improve my score?
Staying current with the following will help to improve your credit score.
- Mortgages
- Car loans
- Other trade lines or lines of credit
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