This piece is from http://www.maximizingmoney.com/ but interesting enough ! Credit Score is very important for each individual in US. But very few knows how do they calculate it .. Here you go.
FICO, or the Fair Isaac Corporation, invented the credit score, and FICO credit scores are still considered the industry standard.
Check out our review on myFICO Credit Score Products for information on how to receive your FICO credit score as well as other credit report and credit score monitoring services.
Your FICO credit score is the standard credit score that practically all credit card issuers review in order to assess your credit qualifications.
FICO scores are calculated by assessing the information provided in your credit bureau reports at Equifax, Experian, and TransUnion. Your credit score can be different at each credit bureau, so you have 3 FICO scores altogether.
FICO scores use a lot of different credit data when calculating your credit score, but this credit data can be grouped into 5 basic categories.
Payment History – 35% of your credit score is based on your payment history for credit cards, loans, and other specific types of accounts as well as your overall history of delinquent and/or paid accounts.
Current Loan Balances – 30% of your credit score is based on the current amount of money you are in debt. This takes into consideration the proportion of your credit lines that are in use as compared to your total available credit.
Length of Credit History – 15% of your credit score is based on how long you’ve had open credit lines and how long your credit lines have been active, including any recent activity.
New Credit – 10% of your credit score is based on the number of your recently opened accounts, recent credit inquiries, and the amount of time since you’ve re-established a positive credit history if you’ve had past credit problems.
Types of Credit – 10% of your credit score is based on the number of various types of credit accounts you have open and their activity history.
Check out the myFICO.com Credit Education Center for more details on how your FICO score is calculated.
Your FICO score can range from about 300 to 850, although the actual range varies slightly depending on which credit bureau is used to calculate the score.
Credit scores of 760 or higher are extremely good.
Credit scores of 700 to 759 are generally considered excellent or very good credit.
Credit scores from 660 to 699 are generally considered good credit.
Credit scores from 620 to 659 are generally considered average credit.
Credit scores from 580 to 619 are generally considered less than average credit.
Credit scores from 500 to 579 are generally considered bad credit or poor credit.
Credit scores below 500 are very bad.
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