The FICO scoring system is the one generally used most in the US. These are the factors that help to determine how your credit score ratings are calculated:
Thirty five percent of the calculation is based on your payment information. The system looks for any unfavorable information that can have a negative effect on a consumer's credit rating or score. The system takes into account late payments and judgments and any negative occurrence that has a negative effect on your score rating. FICO also looks at the age of the incident, so this means that the more recent the occurrence, the worse the effect will be on your score.
Thirty percent of the calculation is based on how much money you owe and what type of debt you have. This has a significant impact on your credit score ratings are calculated.
One of the types of debt is revolving debt which is "plastic" debt. Any card, whether it is credit card or store card is considered here. The calculation is based on the difference between the balance owing versus the available credit. The smaller the difference between the two, the more harm it does to your rating.
Another type is installment debts like an auto loans, where you are making a repayment over a 36 to 60 month period. And lastly open debt, which is the type that gets paid in full each month and the least common of the three types.
Fifteen percent of the calculation is based on your credit history. This represents the length of time you've utilized credit and as such this should benefit you if you have an older credit report. The age of your credit is determined by the date opened of the oldest account.
Ten percent is based on the spread or range of your credit. The more of an assortment of credit you have, the better it is for your score. In other words, if your credit spread over a mortgage, car loan, revolving credit and installment loans, this has a positive effect on your score.
The last ten percent of the calculation is based on the inquiries run on your credit report. These are inquiries by a lender when they check your credit worthiness after an application has been made by a consumer for some form of credit. Keeping inquiries low can help your credit score ratings because a lot of inquiries over a short time period is usually perceived as a signal that the consumer is in financial difficulty.