By now you probably know that credit scores are a pretty big deal. By being able to measure your so-called creditworthiness, lenders use your credit scores to determine everything from your interest rates to your credit limits to your approval ratings — and understanding what goes into credit scores themselves is key to building credit the right way.
Credit scores are calculated using a pretty complicated algorithm that takes five big things (and lots of other little things) into consideration: payment history, debt, length of credit, credit utilization, and types of credit. To make the best of your credit score, you’ll need to understand them — from credit utilization to on-time payments, this is your big-picture primer on credit scores and the things that affect them.
What’s in a Credit Score: The Big 5
No matter how old you are or how great you are at managing your money, understanding financial services jargon is tough — and that includes the weird world of credit score algorithms. At the Council for Inclusion in Financial Services (CIFS), we’re all about helping to educate you so that you can make responsible decisions that make sense. Learn more about us today.