How is a credit score calculated? Read further?

Question

Is it true that they look at how many credit cards you have and determine how far you "could go" into debt? For instance. A person with 1 zero balance credit card would have a better score than a person with 20 zero balance credit cards. Is this correct. Anyone know a website that tells this?

Answer 1

Your credit score is calculated based on a few factors

How long you've had a card....so keeping a credit card for a long time even if you dont use it is beneficial.

How much credit you have and how much of it you use. Dont go near your credit limit if you're looking for a good score. Having too much credit is bad too. So having 20 zero balance cards is not good.

Your payment history.....self explanatory.

Answer 2

There is ZERO correlation between the amount of cards you have, or available credit, and your income.

INCOME IS NOT A FACTOR. Doesn't matter if you make $10K per year or $1 million. They do NOT know how much you make.

Go to myfico.com, annualcreditreport.com, fairisaac.com, all will have info for you.

Having too many cards outstanding, even with zero balances, can hurt your score. That is true. Having too many accounts with balances will hurt more. Closing out old accounts can hurt your score too, since it will reduce the average age of your accounts.

It's a dance, but the FICO guys won't tell you everything. They just tell you enough to keep Congress off their backs. There's something like 42 different reason codes in the FICO scoring system. All have different weights, and all are part of a complicated formula that will never be fully disclosed.

Answer 3

When you go to make a major purchase like a house... this is what the banks look for. 1. No more than 5 "trade lines" per person/couple. (this means, house, car, credit payments or student loans) 2. Your credit should be under 2/3 of what your limit is. 3. No late payments EVER. 4. Using your credit wisely... pay off your credit card every few months, but also let it ride every so often and always pay more than the min. amount due! Once your credit rating is over 775, all your options become open. Remember... no credit is as bad as bad credit. Paying off everything, as backwards as it seems, will HURT your credit, not help. Another thing working against you is going to CCC. That will show up as a negitive on your record for some time... it is looked upon worse than Bankruptsy.

Answer 4

http://www.credit-yourself.com is a great site for this kind of information.

Your credit score is determined by your bill repayment history, the age of your credit relationships - how long the accounts have been open - how much of your available credit you use and how much new credit you apply for.

In your example, both people could have equally good or bad credit scores. You need more information to make a educated guess.

But if you had one maxed out card, your credit score will probably be worse than someone who had twenty cards with zero balances.

Answer 5

Your credit score is balanced between how much money you earn, and how much debt you have or potential debt you could get in.

You should keep the number of cards or accounts you get to a bare minimum, and don't take every offer that comes your way. Pay off things timely.

Answer 6

There are many factors that go into credit scores... debt to income, debt to credit limits, payment history, length of time, and also the ratio between credit cards and installment loans. There's no "better" score for one or twenty cards because it depends on many other factors.

Answer 7

There are many, many variable to your credit score. Not just the number of credit cards you have.

Here's a site with more info.

http://www.how-is-your-credit.info/

Answer 8

yes - Fair Isaacs and Co is the company that makes the score models for all three credit bureaus. The link to their public info is below.

The score model is VERY extensive and includes all sorts of information about your spending and payment habits. Essentially, everything matters. If you have special concerns, contact a mortgage broker to help you assess your score and put together a gameplan to improve it. We are always happy to help a potential client get themselves into better shape.

Answer 9

It's complicated. Having open lines of credit can actually help your score, especially if the've been open for a long time. However, if you have too much open credit (in relation to your income), that hurts your score. Also, opening a lot of new credit accounts reduces your score.

Answer 10

That is correct. Too many cards will degrade a score, but I doubt that having four or five would make much difference. Unfortunately, only Fair, Isaac & Co. know for sure, and they aren't telling.