You enter your credit history information and receive a rating or range of points that match your profile. Credit scoring calculators are great tools to help you find out what to expect when applying for a new credit account. Knowing the result means that you will know what interest rates are fair. This can save you a lot of money. Here is a guide to using the credit calculator.
Credit score formula
Before you try to calculate your credit score, it is important to find out how this number is determined. FICO results are calculated on the basis of the information contained in the credit report. Approximately 35% of your results come from your payment history. It is listed under each account. Late payments reduce your score. If your account reaches the 120-day overdue point, your score will take a mass hit. 30% of credit points come from your debt to credit ratio. This is also called usage. While installment accounts affect your result, it is the trading accounts that make up the majority of the 30%. The closer your credit balance is to your credit limit, the lower your credit score will be. The length of your credit history is 15% of your score. This is calculated by calculating the average age of all accounts. Opening a new account will reduce this number and consequently reduce your score. The types of credit you hold account for 10%. Your credit report should contain a mix of installment and revolving accounts. If you do not have a credit card, your score will deteriorate. The last 10% comes from your credit queries. Inquiries have an impact on your result for up to two years. It is important to know that the last negative effects have a greater impact on your score than older negatives. If you are late with payments four years ago, this will not harm you almost as much as a year ago.
Need for information to get the result
No matter what tools you use to estimate your creditworthiness, you will need some information. The first step is to specify the age of your account. Usually you will be asked to provide the date of your oldest account, as well as the latest account. This gives the calculator the approximate age of your credit history. The next step is to enter the types of accounts you have. You will be asked how many revolving and installment accounts you have opened. You will also be asked if you have any accounts that are debited or in collections. In addition, if you have any judgments, bankruptcies, serious wrongdoings or other credit issues, you will also exchange them.
When the credit scoring calculator has your basic information, it’s time to exchange specific information. The credit score calculator will need credit limits and balances for all your credit cards. Simply add limits from each card as well as balances. Thanks to this information, the credit score calculator decides on the use of your credit. You may also be asked to add balances and original installment loan amounts for more precise results.
The next step is to add a payment history. You can list any late payments you have in your credit report. To get an accurate result, you can list how many days you were late in your account, as well as how late you were recently with your payments. Different credit point calculators will ask for different levels of payment history details.
If you can provide more details, you will get a better rating of your payment history. Finally, you will be asked how you last applied for credit. Read more about credit scoring by Scott and Terry, her comment is here.