Your credit score, or FICO score, is essentially a calculation used by lenders to determine your eligibility for a loan, how much you can borrow and the corresponding interest rate.
Previously, your credit score was a mysterious, hidden computation that was primarily based on your payment history. Today, the breakdown of your score is a more clear-cut computation based on numerous important factors.
The five different factors used to calculate a score range of 300-850 need to be carefully examined and understood:
- Payment history
- Amounts owed
- Length of credit history
- Credit mix
- New credit