Friday, 28 July 2017

Credit 102 - A credit score breakdown

Used with permission by

If you read Wednesday's post, you have already read about credit basics. Today I am going to take a quick moment to talk about how that credit score is calculated.

Credit scores are calculated using multiple sources, all given different levels of importance. In essence, there are five factors that help calculate your credit score.

Payment history makes up the largest part of your credit score. It will look through your entire credit history and see if you have any late payments, missed payments or delinquent accounts. Every time you made an error regarding your finances, it will negatively effect your credit score.

Amounts owed make up the next biggest part of the pie. This takes into account any loans you have currently outstanding. The more loans you have, the worse off you will be.

Credit history makes up only 15 per cent of your overall credit score. The longer you have been building credit, the better.

New credit includes any current requests for credit. Multiple requests for new forms of credit, especially denied requests, have a big impact inside that 10 per cent.

Types of credits used is the final slice of the pie and refers to where your debt is held. It takes into account things like credit cards, lines of credit and mortgages to see where your current debt is residing.

All of this together makes your credit score.

Any questions, please leave them in the comments below!


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  1. I feel like the concepts of credit and credit history should be taught in our school systems - setting kids up to be more financially responsible when they leave high school!
    Britt |

  2. I agree Britt. If my parents hadn't been hardcore savers, I probably wouldn't have known nearly enough going into adulthood.