Credit Scoring

Similar to SAT scores, your FICO credit score can range from a low of 300 to a high of 850, although the overwhelming majority of Americans fall into the category of 550 to 750. It is based on a variety of factors, which include:

Payment History (35%)
- How well you pay your bills;
Capacity (30%)
- How much credit you have vs. how much you are using;
Length of credit (15%)
- How long you have had your credit relationships
Type of credit (10%)
- The quality of lenders and the percentage breakdown between credit and installment debt
Search and acquisition of new credit (10%)
- How recently (and how often) you have inquired about opening new credit accounts

Secret to Your Credit Score

Your credit score is important because it affects not just whether or not you have the ability to obtain a mortgage, credit card or other loan, but also how much you can borrow and at what rate and terms. Your credit score may also help determine other things, such as whether or not you can rent an apartment or get a cell phone.
Although over time your credit will improve, it takes approximately 24 months to restore credit from only one late payment.