It’s a Money Thing: Breakdown of a Credit Score – Reliant Community Credit Union

Excuse me What do you know about credit scores? Hmmm

Not very much Also, who said that? I did Do you know what a good credit score is? Uh, 12? No A hundred No

Four… out of five No Allow me to explain A credit score is a three digit number that's calculated by credit bureaus and gives banks, credit unions and landlords an idea how likely you are to pay your loan or rent on time Most scores are between 300 and 850

Anything above 720 is considered "prime" Prime? Excellent Ah Having a low score means you could be turned down for a loan And if you're somewhere in the middle… You still get the loan? Sometimes, but you'll have to pay more interest, and that's not good because it will cost you more in the long run

So what goes into a credit score, Credit Squirrel? I'm glad you asked Each credit bureau has a different calculation, but it basically goes like this: 35% is based on payment history If you make payments on time, it's good 30% is based on capacity This shows how much of your available credit is being used

If you're close to maxing out the credit limit on your credit cards or other lines of credit, it's not good Even if you're making regular payments on time 15% is based on length of credit The longer that you've been using credit, the clearer the snapshot of your credit habits This is your credit history

10% is based on new credit If you open lots of credit cards or loans in a short amount of time, you look risky Lastly, another 10% is based on the types of credit you use This is your mix of credit cards including retail store cards, bank and credit union cards, plus student and auto loans and mortgages And that my friend is the breakdown of a credit score

Thanks Credit Squirrel That was very helpful Do you have any more questions for me? Yes How do you know all this and also how come you can talk? Thanks Credit Squirrel! Oh look Credit Squirrel forgot his tiny hat