How Credit Scores Are Calculated

What makes a good credit score?  What factors do credit reporting bureaus consider when generating scores?  Unless recent bankruptcies, collection accounts for outstanding tax payments are involved, the following criteria is usually accurate:

35% Payment History – Recent delinquencies bring scores down more than those in the past

30% Balance – high balances over 75% of the available credit limit hurt credit scores. Small balances on multiple cards are more favorable than one maxed out card

15% Credit History – 3-5 tradelines of credit, and a loan with a long clean history is best

10% Type of credit – Furniture and appliances stores “pay later” credit lines are less favorable and considered higher risk

10% Number of inquiries – These cost 5-15 points on average off your credit score per inquiry.  Mortgage inquiries don’t count as long as they are within 14 days of each other.