How Credit Scores are Weighted
Credit scores are three-digit numbers which credit bureaus like Equifax, Experian, and TransUnion keep on individual borrowers to give banks and other lending institutions an indication how much of a risk borrowers are for loans and credit. Because of how much they can affect your ability to take on both credit and larger loans, it can be very beneficial to understand how these companies get these numbers.
If you or someone you love is considering filing for bankruptcy in order to overcome debt, the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office, LLC may be able to help. Contact us today by calling 414-377-0518 to learn more.
Credit Score Elements
FICO credit scores are formulated by the weighted combination of five elements. The following are considered when formulating credit scores:
- 35% of the score is based on your history of repaying your debts on time.
- 30% of the score is your credit limit vs. the money you owe. The less money you borrow against your credit limit, the better.
- 15% of the score is how long your credit history is. The longer your credit history, the better.
- 10% of the score is based on how much new credit you have opened. Usually more new credit makes you seem more of a credit risk.
- 10% of the score is based on the diversity of your credit. Mortgage loans, credit cards, and retail accounts are all counted.
These five elements are combined into a three-digit FICO score. The higher this score, the better.
Contact Us
If you or someone you love is considering filing for bankruptcy to relieve the burden of unsustainable debt, the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office, LLC may be able to help. Contact us today at 414-377-0518 for more information.