What goes into a credit score?
Many consumers think that as long as they
pay their bills on time they will automatically have high credit scores.
That's not how it works. Obviously, paying your bills on time is important;
but understanding the factors that make up your credit scores is your
key to maintaining good credit, as well as your key to taking immediate
and lifelong steps toward credit improvement. If
you manage each factor properly, the basic formula is easy to understand
and is a powerful tool.
FACT
The exact formula for calculating your credit scores is not public, and
probably never will be. It is under U.S. Patent Law, and only Fair Isaac
& Co. has access to the formula.
According to Fair Isaac & Co., the creator of the scoring system, there are five factors that go into calculating credit scores. The following pie chart is a guideline as to how much each factor is considered:
