What is a good Credit Score
Acceptable ranges may vary from one system to another. However, a score is generally considered good if it is above the average credit score in a given system. FICO, the most widely used scoring system, has revealed the following criteria:
Payment history – 35%. Payment history or payment behavior refers to the timeliness of bill payments. Late and missed payments will negatively affect credit scores, and the more recently they occurred, the more they pull the score down.
Outstanding debt – 30%. This refers to the amount of current debt, particularly in proportion with the credit limit. Even if one has a good credit standing, the score can still be negatively affected if the debt is close to the credit limit.
Credit depth – 15%. The length of one’s credit history can also affect credit scores. The longer an account has been open, the better, provided that all debts are cleared on time.
Recent credit – 10%. New credit accounts can pull down a credit score, because they make the consumer’s finances seem overextended. This doesn’t include promotional inquiries.
Credit types – 10%. Fair Isaac favors a ‘healthy mix’ of credit types, particularly a combination of installment and revolving accounts. This is mostly used when there isn’t enough information to determine other factors.