Understanding Your Credit Score

Brought to You by our Partners at College Ave Student Loans

There’s a good chance you’ve heard about “credit scores” – those three-digit numbers commonly used by lenders to predict the likelihood that you will pay back a loan on time. Your credit score is often a driving factor in determining whether a lender will extend you credit and, if so, at what interest rate. Usually, the better your credit score, the lower the interest rate you’ll be offered.

But what components actually make up your credit score? Let’s break it down.

Dashes

What Components Make Up My Credit Score?

The most commonly used credit score is the FICO score – created by the Fair Isaac Corporation. The main factors that influence your FICO credit score can be broken down into five different categories:

1. Payment History (Total Impact: 35%): This is a reflection of whether your prior bills were paid on time, how many were sent out for collection, and any bankruptcies.

2. Debt Amount Owed (Total Impact: 30%): This refers to the amount of credit utilized compared to the amount of credit available.

3. Length of Credit History (Total Impact: 15%): The longer the credit history, the better it is for the overall credit score. Credit history length refers to the age of a specific credit card or other line of credit.

Understanding Your Credit Score

4. New Credit/Inquiries (Total Impact: 10%): An inquiry is when a lender obtains your credit report from one of the bureaus after you request credit from them.

5. Types of Credit (Total Impact: 10%): This refers to the mix of credit types on your account.

Learn More About Understanding Your Credit Score!

We’re sure there’s more you’d like to know about credit scores! Head over to the College Ave Student Loan’s blog to find out more about different types of credit inquiries, how they are generated, and whether applying for more than one loan will affect your score. Have additional questions? Post a comment below!

Dashes

CJ_RelatedArticlesStrip

CJ_Financial Aid Letters

0

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Popular Articles
9 Books to Add to Your Winter Reading List

9 Books to Add to Your Winter Reading List
11.30.18

We can't think of anything cozier than curling up indoors with a good book on a cold winter day. If you're on the same page as Read More…
9 Study Hacks to Help You Nail Your Next Exam

9 Study Hacks to Help You Nail Your Next Exam
10.01.18

Exams in college are inevitable, but that doesn't mean everybody will hunker down for a thorough study session before their big test. After all, studying can Read More…
Smart Money Tips For Students

Smart Money Tips For Students
01.26.11

We take a variety of classes at college—English, biology, psychology, history.  These classes prepare us for our careers and make us all-the-more smarter, but there's one Read More…
8 Self-Care Apps That Are Worth the Download

8 Self-Care Apps That Are Worth the Download
03.16.18

We're not ragging on college life or anything (honestly, we think it's the best), but it's way too easy getting caught up in all the excitement and Read More…
Twitter
The College Juice © 2018