Your credit is one of the most important components in your financial life. A good credit score determines if you will be approved for a loan or line of credit.
The most widely used credit scoring system (FICO) was developed by Fair Isaac Corporation. A FICO score can range from 300 to 850. The higher the score, the better your credit profile. Individuals with a higher score may benefit from lower insurance rates and interest rates for loans. The average consumer holds a credit score in the range of 600 to 750.
A credit score is determined by 5 factors:
- Your Payment History
- Amounts Owed
- Length Of Credit History
- Types Of Credit Used
- New Credit
What is not considered in a credit score:
- Housing status - if you rent or own
- Income
- Length of time at your current job
- Length of time at your current address
- Previous denial of credit
