A credit score is an indicator of how likely you are to default on a loan or credit card in the next 24 months. This information is used by credit grantors when evaluating your credit for approval. Your BEACON®, FICO® or EMPIRICA® score is based solely on information in your credit file maintained by the credit reporting agencies. Other scores may be based on a combination of credit information and other information that you supply on your credit application.

The way you have handled credit in the past may indicate how you will manage credit in the future. Credit scores cannot predict with certainty how you will manage credit, but they do provide an objective estimate of how likely you are to repay on time and according to terms.

How Are Scores Calculated?

Your credit report is the basis of your FICO® score. The report details your credit history as it has been reported to the credit reporting agency by lenders who have extended credit to you, by court records and by you. The FICO score analyzes information from the trade line, inquiry, public record and collection sections of your credit report.

A FICO score evaluates five main categories of information in your credit report, and compares this information to the patterns in hundreds of thousands of past credit reports. These five categories are, in order of importance:

1. Payment history — what is your track record? 35 % of the score

Risk predictors here look at:

· Severity – how bad are the delinquencies?

· Recency – how recent are they?

· Frequency – how many times did it occur?

2. Amounts owed — how much is too much? 30% of the score

Risk predictors here look at:

· Large outstanding balances

· The ratio of balances to credit limits

3. Length of credit history — how established is yours? 15% of the score

Risk predictors here look at:

· Age of the trade lines - (the age of the oldest account, the average age of accounts, or both).

4. New credit — are you taking on more debt? 10% of the score

Risk predictors here look at:

· Number of inquiries and new account openings

5. Types of credit in use — is it a healthy mix? 10% of the score

Risk predictors here look at:

· Number of trade lines reported for each type: bankcards, retail, department store cards, installment loans, etc.

Doug Parker is the CEO of http://www.RepairMyCreditNow.com (RMCN Credit Services, Inc.). For more information on http://www.RepairMyCreditNow.com or to learn more about Credit Education & Restoration, log on to http://www.RepairMyCreditNow.com or call (888) 4-MY-REPAIR to speak with a customer representative.

• Getting Started With Credit Counseling


• Be Smart With Your Credit Card


• Taking Control of Your Credit


• Is It Time For Credit Counseling?


• Advantages of Switching Credit Cards


• A Crash Course on Credit Scores


• Rebate Credit Cards


• Repair My Credit – I Dont Know Where To Start


• Credit Cards Are Like Loans


• Finding the Best Gas Credit Cards