Credit reporting agencies collect assorted data

Q:

What else goes into your credit score in addition to your payment history?

I have a pretty good payment history, only a couple of late mortgage payments but was denied a refinance because my lender said my score was too low.

I can’t believe just a couple of late payments would lower my score that much. What else goes into the score?

A:

Good question. Most people know that a poor credit score can keep them from getting a mortgage, a new car loan, a low interest rate on a credit card, even an apartment or a job.

But many people are not clear about just what goes into a good credit score or how each item is weighted.

For example, most people know a good repayment history is critical, but just how important? How important is the total amount of credit you have, and how much of that total you have accessed?

Lenders get your credit score from the three major credit reporting agencies: TransUnion, Equifax and Experion. Your credit score provided by each of these agencies may actually differ somewhat.

This is because the different agencies may collect different information about you or may have inaccurate information. Consumers are entitled to one free credit report each year from each of the reporting agencies.

It is a good idea to get these free reports, look them over and make sure there are no mistakes or errors. You can request a free copy of your credit report from: www.annualcreditreport.com.

Lenders are also now required to provide people with the scores they considered when denying a person credit, as well as other reasons for the denial. If you have been denied credit, make sure you get this information from the lender.

So, just what goes into a credit score, and how are they calculated? Your payment history – whether you pay your bills on time – makes up 35 percent of your score. How much you owe, and how much of your available credit is being used, makes up another 30 percent of your score.

The remaining third is composed of your credit history and how long each account has been open (15 percent), how many new credit accounts you have and how many new credit checks (10 percent).

The types of credit accounts you have (mortgage, car loan, credit cards, personal loans, etc.) make up the remaining 10 percent of your score.  

Demographics, such as age, gender, race, religion, marital status, etc. do not play a role in calculating a credit score.