The three prominent credit bureaus which maintain credit records are TransUnion, Equifax and Experian. Any non-payment is immediately reported to these bureaus and reflected in one’s credit report. A credit score is calculated by a special type of software from Fair Issac Corporation Company, from which the FICO score name stems.
There are several different components, with individual weightings, that comprise your credit score:
Payment History - This accounts for 35% of a credit score and indicates timely payment of monthly bills or otherwise.
Extent of Indebtedness - How much an individual owes constitutes as high as 30% of the total credit score. Thus, it is important to keep your borrowings low, preferably below 40% of maximum credit limits.
Length of Credit History - How long a person has maintained credit carries a weighting of 15%. The longer the credit history, the better this reflects on your score.
Types of Credit - The composition and different types of credit that a person has comprise 10% of the credit score.
New Credit - The size of new credit and inquiries has a weighting of the remaining 10% on the credit score.
A credit score varies between 350 and 850. While a score of 850 indicates excellent credit, 350 very poorly on the individual’s financial responsibility. To improve a score, should reduce credit card debt, pay bills in time, and be careful in the types of credit you utilize.