subject: Credit Score Scale News - [print this page] Understanding your position on the credit score scale is very important before you apply for credit, buy a car or home, or purchase identity protection programs. Your credit standing can become very necessary, so keeping on top of what is in your credit report is the best way to safeguard it. The credit score scale goes from 300 to 900, and it is rare to have a score at the far ends of the scale; most companies and reporting agencies use a scale from 350 to 850. Average to good credit falls between 600 and 700 on the credit score scale, and this is where most consumers score.
There are five major elements used in determining where you are on the credit score scale. Your past payment history establishes about 35% of your credit score. The time-frame of items on your credit report is in some cases more important than the item itself. A bankruptcy with good or better credit since filing, for example, will have less negative impact than recent late payments. Also, many people think that paying off credit cards that had recent late payments will improve their credit.
The fact of the matter is that payment history won't be affected by paying off late accounts.
Your credit use accounts for approximately 30% of your score. Having low balances on several cards is better for your position on the credit score scale than owing the same amount on just a few cards. 15% of your score is made up of the length of your credit history.
It is good for your rating to maintain open credit accounts. Closing seasoned, or mature, accounts and opening new ones can negatively affect where you are on the credit score scale. The different kinds of credit accounts you have will determine about 10% of your credit score.
Department store and bank loans impact your score more than finance accounts. To maximize your place on the credit score scale, get loans from your bank to cover purchases instead of applying to finance companies. The rest of your credit score is made up of inquiries from lenders.
When shopping for a car or mortgage, multiple inquiries within a 14-day period will be considered a single inquiry, but other instances of many inquiries in a short time can pose a risk to your credit rating. Experian, TransUnion, and Equifax are the three major reporting agencies. They make monthly updates to your credit report based on information they receive about your credit and loan accounts and payment histories on those accounts. So, every month your place on the credit score scale is affected by the agency reportings.
