Understanding how your credit score is determined will make you enable you to practice good credit, thus keeping your score good. Please note that your credit score is computed by analyzing the ‘whole’ of your credit info and the variety of factors that make up the whole.

Outlined below are the major common variable that are utilized by the major credit reporting agencies when determining your credit score.

Age:

How old you are is no a factor when determining your credit score.

Payment History:

According to Fair Isaacs, the company that has developed the model for calculating credit scores, indicates that your payment history makes up around 40% of your credit score. If you have one or two late payments, your credit score will not be affected. However, if you have no late payments, that does not mean that you have perfect credit.

There are several main aspects that are used when computing your payment history:

-- How has your past performance been with lenders? Have you paid your loans and credit cards on time? Obviously, the fewer the amount of late payments, the better off you will be.

-- How long is your credit history? – The greater duration of time you have had good credit, the better.

-- When was the last time you had a negative mark on your credit? - The longer, the better.

-- Do you have unpaid debts that can be viewed in public records? i.e. bankruptcy, foreclosure, judgments, collection lawsuits, tax liens, etc..

-- Do you have any severe delinquency payments? – This means late payments of 30 days or more. One late delinquent payment will not hurt your credit score. However, if you have more than one, your credit will be affected.

Total Debt Amount:

Having debt is positive, but too much debt is bad. You need to know how to control your debt intelligently. According to Fair Isaacs, 30% of your credit score will be determined by how much debt you have.

There are several key variables that are utilized when determining your debt record:

-- How many open accounts do you have? – One or two open accounts is fine. However, you will be labeled as high risk if you have anything more.

-- What is your credit balance compared to your credit limits? – Meaning, how much of your credit lines are being used? A rule of thumb is to always have at least 2/3 of your credit lines not in use.

-- Do you have installment loans? How much do you owe? – A history of paying down these types of loans will reflect responsible credit practices.

How Long Have You Had Credit?:

Your length of credit history makes up about 15% of your credit score.

Indicators that determine your credit history length include the amount of accounts you have, how long they have been open and how often you use them.

Do You Have New Credit?

You will be labeled as high-risk id you have too much new credit. This is a sign of overextending yourself. The amount of new credit you have makes up about 10% of your overall credit score.

Variable that help compute new credit include how many new accounts you have, when the last time you opened a new account, the amount of inquiries on your credit report and whether or not you new credit history is a positive one.