The credit score is an important element when dealing with credit. It is an important basis regarding getting various loans, applying for mortgages or even getting another credit card. It’s something that you may have heard of but do not really know much about it, especially how it’s calculated. There are various online tools such as that you can try if you do not know how to calculate your credit score. With these tools, you just have to enter the relevant details about your income and all the debts that you have and you will get an accurate result about your credit score. 

And, well, you cannot fully blame yourself if you feel you’re just not doing your homework, so do not worry too much. The score created by the Fair Isaac Corporation called the FICO score is the primary and most commonly known basis that indicates your credit reputation. The thing is, the actual formula is only inside information that people working with credit agencies can learn of. But the same cannot be said about the factors included in the calculation, and it’s best that you take them to mind, especially how much weight each factor holds in the formula.

The first of these elements and what is generally considered to have the heaviest consideration is payment history. In a nutshell, this tells how responsible you are in handling your payments. Obviously, the better you are in making your deadlines with the correct amount, the more positive your payment history will be.

Of course, the debt will be taken into consideration, and this has quite a significant weight in the calculation of your credit score. Aside from taking into account the amount of your debt, this element also looks at the number of sources where the said debt is distributed. It is vital to note that the more sources your debt is spread to, the higher your credit score would be.

Now to begin looking at the factors that carry lesser weight than the previous two. Credit history length measures how long you’ve been having credit ever since the first time you have applied for it. Simply put, the longer you’ve been dealing with credit, the higher your score. Applying for new credit, whatever the reason may be, will be another factor. Your score will not be that favorable if you have done it many times in the past. Finally, the types of credit will be reviewed as well. There are types that can mean bad news, like having more than enough credit cards, and some that won’t reflect as bad, like mortgages and several kinds of loans.

There are others besides those mentioned that are used in the overall credit scoring, like your work history (the duration of your employment and salary history). But to make matters a lot less complicated for you, though, all you have to do is be responsible in your payment schemes so you can have the best credit score that you can possibly attain. This will ensure a smoother process in conducting business involving your credit.

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