What is in a credit score?

What is in a credit score?

A trade line is a record of activity for an account listed on your credit report. Each separate account represents a different trade line that is reported to one or more credit reporting agencies. These trade lines contain important information about each account. The culmination of all of this account data is then developed into an individual’s credit score.

The most common credit score calculation method is provided by FICO. So, what factors make up your FICO score? Here’s are the points that FICO uses to calculate scores:

Payment History (35%)

This section looks at your past account history, and whether you have paid your accounts on time. A consistent history of paying your accounts on time will build a lender’s confidence in your ability to keep your obligations.


Amounts Owed (30%)

This section looks at your accounts and the money owing on your accounts. This also takes into consideration the amount of your available credit you are borrowing against. Having a lot of accounts doesn’t mean that you’re high risk necessarily, but if you are using a lot of your available credit, it can show as a sign that you’re overextended.


Length of Credit History (15%)

This section reviews your accounts based on the length of time they’ve been open, including how old is your oldest account, and how new is your newest account. The more consistent your accounts are – and the longer they have been open – can show stability.


Credit Mix (10%)

This section looks at your different types of credit being used, including installment loans, credit cards, auto loans, and store credit accounts. A greater mix can show you’re actually a responsible borrower.


New Credit (10%)

This section considers how many new accounts you’ve opened to ensure you aren’t overextending yourself.


There are also other things that are included in your credit report beyond just your score. Those things include:

Identifying Information – or information about you. This would include your name, address, Social Security Number, date of birth, and possibly other identifying information about you. This is what ties your trade lines to the correct credit profile.

Trade Lines – a list of your credit accounts. This information is provided to your credit profile by lenders as you use their services. These trade lines show if an account is open or closed, any credit limits the account may have, balances and payment histories. Trade lines will generally remain on your credit for 7-10 years after your account is closed to show a successful payment history.

Credit Inquiries – will be placed on your accounts when you apply for a loan. These inquiries help lenders know how much credit you’re applying for, or have applied for recently. These inquiries don’t include instances when you check your own credit score, but it will show each time you apply for credit.

Public Record and Collections – reports from courts and from collection agencies are also included in your credit report.

Each trade line on your credit report can make a positive or negative affect effect on your credit score. The more positive trade lines you have on your credit report will typically increase your credit score and show stability. One way you can add a positive trade credit line to your credit report is by having  when add your rent and utility payments reported to credit reporting agencies bureaus using a service with a certified credit reporting agency like RentPlus.

Enroll in RentPlus and start improving your credit score today!

*Information contained here is provided at www.myfico.com


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