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How is Credit Scores Calculated?

Posted by Percy A Lowe on September 17, 2013 at 5:00 AM

The three major credit reporting agencies don't necessarily use the same scoring. So don't be surprised when you see 3 different credit agencies come up with 3 slightly different scores.

Your credit score is a number generated by a mathematical formula based on the information and data in your credit report. Your information is further compared to millions of other people's information and data.

This number is a pretty accurate prediction of how likely you are to pay your bills and honor your commitments to your lenders. Please take in count your very own state adverage credit score that plays a role. Meaning the mathematical formula looks at all the others in your state as well as you. So, how your next door nieghbor pays his bills reflect on you as well that helps gives a state average. 

Also, your geographic area, zip codes, address, and etc.These are a few things that plays into credit scores. That is why it is so important to not allow your credit score to sit dormant. It is important to do something once a month are for a lenght of time with positive payments. Now, their is a nice way to off set the formula to help you as a consumer. But you would need someone who understand the pie chart percentages that factor into your credit scores. That also can be explain in one of my workshops.

Finally, I like to say that since the formula is not really handed out into the public. We have to really understand all the things that factor into our credit score with out the formula. So, that we can manage those things in the right manner to at least keep our credit score above our very own state average. I know you saying I don't even know my own state average to know where I need to be. Well stay on top of my blogs that will be explain soonm within my blogs.  

 

Categories: Credit Education and Restoration

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