Consumer Law

Credit score basics

By Sam Glover

All the information out there on credit scores can be confusing. At the heart is the FICO score, which is what lenders use to determine your riskiness as a borrower.

Here are the main elements of the FICO score:

• Payment history ? Account payment information on specific types of accounts you may have, such as credit cards, retail accounts, installment loans (such as car loans), finance company accounts, mortgage, etc.
• Amounts owed ? How much you owe on different accounts, including the proportion of balances owed to total credit limits. (The lower this ratio, the better.)
• Length of credit history ? How long your various accounts have been open, as well as the time since the most recent activity in each.
• New credit ? The number of recently opened accounts as compared to your overall number of open accounts, tracked by account type.
• Types of credit used ? The number of various types of accounts you have (credit cards, loans, etc.)

There are also some “soft factors” based on your other borrowing behavior, such as judgments against you, late or missed payments, and more. Queercents has a great post detailing what you need to know about your credit score.

FICO 101 | Queercents

Full post as published by Caveat Emptor on July 23, 2009 (boomark / email).