Skip to main content

Boost Your Borrowing Power by Boosting Your Credit Score

Your credit score is a rating that lenders can use to gauge how likely you may be to repay debts on time. A typical credit score will range between 300 points and 850 points. Generally speaking, higher scores are presumed to represent lower risks -- the more attractive your score might be to a lender, the better the deals you may be offered. In other words, you can improve your position in the borrowing process by taking steps to boost your score.

Factors That Determine Your Credit Score

Credit scores are compiled by the three major credit reporting agencies -- Equifax, Experian, and TransUnion -- based on information provided by creditors. They generate scores using a proprietary formula that assigns weightings to the five main factors illustrated below:

  • Your payment history, which is whether you have missed or been late with any credit payments (the fewer late or missed payments, the better)

  • Your utilization ratio, which is the amount you owe creditors compared with the amount of credit that is available to you (the lower the utilization, the better)

  • The length of your credit history (how long various accounts have been open)

  • The types of credit you use (the more diversified your credit resume is among car loans, mortgages, credit cards, etc., the better)

  • The amount of new credit on your record.
  •  

    As you can see in this chart, the most important factors in your score are generally the amounts you owe and the rate at which you repay your loans.

    Relative Weights in the Credit Score Equation



    Factors that Determine Credit Score

    Sources: myFICO.com; Fair Isaac Corporation.


    Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content. 
    © 2015 Wealth Management Systems Inc. All rights reserved.


    This website and the articles and other media contained within (the “content”) are provided as a free service to you and are for general informational purposes only. The content is provided to us by our vendors, and our vendors may obtain their content from other parties. While we have vetted our vendors from whom we directly receive content, and believe that our vendors have vetted their providers, we do not control the content and we make no representations or guarantees as to the accuracy, completeness or timeliness of content on this website. Information on this website is not intended to provide legal, accounting, tax or other advice. We also make no warranty or representation regarding, and do not endorse, any linked websites or the information contained therein.
     


    Questions? We are here for you...

    To ensure your safety, please do not include sensitive information in your submission.