Credit Score Estimator

A credit score is the most important tool that an American consumer or business person can maintain, and these scores are set by major credit reporting agencies.

A credit score is estimated similar to grade school. A teacher calculates grades by taking test scores, homework, attendance and anything else they want to use, weighing each one according to importance to come up with a final, single-number score. It's the same for a credit score. But instead of using the scores from pop quizzes and papers, it uses the information in your credit report.

Your debts show up on a credit report, but your credit score is a little different. Its job is to give lenders a yes-or-no answer in response to the question, "Will this person pay my money back?"

The number ranges from 300 to 850. Here's how it breaks down:

35 percent of the score is based on your payment history. What a lender wants to see is whether you make your payments on time, and if not how often you are late. The more recent, the worse it will be for your overall score.

30 percent of the score is based on outstanding debt. How much do you owe on car or home loans? How many credit cards do you have that are at their credit limits? The more cards you have at their limits, the lower your score will be.

15 percent of the score is based on the length of time you've had credit. The longer the better, because more information about your past payment history gives a better picture of your future payments.

10 percent of the score is based on new credit. Opening new credit accounts will negatively affect your score for a short time. Each time a lender accesses you files it has a negative impact.

10 percent of the score is based on the types of credit you currently have.

Your data is compared to that of other consumers with similar histories and profiles. Some lenders also have their own scoring methods, which may include information such as your income or how long you've been at the same job.