Every person has multiple credit scores, depending on the scoring model that’s been used. And yes, they are a few.
Mostly, it’s the FICO credit score that’s used but even then, you have different FICO scores—one for every credit bureau. Apart from that, there are other types of scores.
The FICO score is the most widely used credit score. It’s particularly important for auto and home loans. But no matter which credit score you follow, every credit score is meant to tell the lenders the same thing: Will you be able to pay the borrowed money or not.
The FICO score is calculated out of your debt value and how much of that was repaid by you. The score could be as low as 350 and as high as 850. The several different components of your credits score are based on the following:
- Payment History: How many payments did you miss or whether you ever defaulted on loans. This constitutes 35% of your total score.
- Amounts overdue: How much do you owe someone. This takes 30% of your credit score.
- Credit Length: Have you been borrowing for a long time or you’re just new? Your credit score includes 15% for this.
- New Credit: Have you applied for any new loans or any other type of credit? This will give a 10% weighting to your credit score.
- Type of Credit: How healthy is your mix of credit? This is 10% of your credit score.
