How Credit Score is Calculated?

What is Credit Score?

The credit score is the report card for your entire credit history. The credit scoreĀ is generally calculated through a meter which ranges from 0 to 850. These different categories or factors which are taken into account at the time of calculating your credit score are payment history (35%), debt and loan (30%), length of credit history (15%), new credit (10%) and type of credit accounts used (10%). All of these factors are vital for getting a good credit score. You can also know about the best tips to improve your credit score.

How Credit Score is Calculated?

Check the best factors that you always need to remember for having the best credit score. This different factors are considered by the banks and the final credit score is calculated on the results.

Payment History (35%)

It takes into account credit accounts such as
credit cards, lines of credit, retail department store accounts, installment loans, auto loans, student loans, finance company accounts, home equity loans and mortgage loans.

  • Make payments on time
  • It has positive impact
  • Is the most vital factor
  • It accounts for 35% of your score
  • It shows whether you make payments on time, how often you miss payments

Debt and Loan (30%)

It takes into account and is completely based upon the entire amount you owe, the number and types of accounts you have. You should know that, that the new loans with little payment history may drop your score.

  • Pay off your loans
  • Try to make online payment also
  • It accounts for 30% of your score
  • Lower your credit score through high balances
  • It calculates total amount versus the amount due
what is credit score? How credit score is calculated

Factors to Calculate Credit Score

Credit History (15%)

The credit history is the last factor that is always taken into account at the time of making the credit report and also calculating your credit score. It checks the entire history of your credit right from the start till the end.

  • It accounts for 15% of your score
  • Checks your entire credit history
  • Takes into account your old account
  • Also verifies the dates of new accounts
  • Try to keep your credit history clear of any debt

Account Type (10%)

You should take into account the many types of accounts that you generally have. The types of loans have installment loans, home loans, and retail and credit cards may improve your score and know the best type.

  • Have more trade-lines always
  • Try to have multiple tradelines
  • It accounts for 10% of your score
  • All accounts should always be updated
  • Consists of installment loans, home loans, and retail and credit cards

Recent Credit (10%)

The latest kinds of updates or transactions are also an important factor to calculate and improve your credit score. Along with the next largest component is the amount that you currently owe.

  • Have less new loans
  • Take less new account requests
  • It accounts for 10% of your score
  • Your recent credit is also important
  • Accounts which are more than 20 years old are good for credit


After learning the ways and the factors that one should take into account for getting the best credit score.It is very vital for you to know about the process by which your credit score is calculated. The better that you know about the different factors that combines your credit score, the better chance you will get to make your credit score better. The given points are always very important at the time of asking for loans and also for decreasing your debt along with increasing your credit limit.


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