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Credit Score Calculation -
How Your Credit is Assessed

A range of factors are taken into account in determining your credit score rating.

Lenders will consider these factors in deciding whether or not to provide credit.

Some of the main considerations are:-

  • Payment history
  • Total debts
  • Credit history duration
  • Credit types
  • New credit accounts

Payment history

A credit payment history shows how well you have paid off any past debts and liabilities. This is a key factor in calculating a credit score as past payments are regarded as a strong indicator of the likelihood of debts being paid off in the future.

Any late payments, delinquencies, bankruptcies and liens shown in a payment history can affect your credit score.

Payment history typically constitutes about a third of the weighting in a credit score calculation.

Total debts

The current amount of total debts is also a key component of a credit score calc. A high level of debts is likely to have a negative impact on your credit score particularly if the payment history of repaying debts is poor. In such a case a lender would probably require a high interest rate on amounts borrowed or refuse credit entirely.

Credit history duration

The length of time that credit facilities have been used is also factored into a credit score calculator. In general the longer the credit history the more positive impact on a credit score as there is a lengthier track record compared with a shorter history and therefore more evidence of payment history.

Credit types

Roughly 10% of a credit score is influenced by the mix of credit being used. A balanced credit mix consisting of a mortgage, auto loan and credit card may increase your score. However a badly weighted mix can have a negative effect.

New credit accounts

New credit accounts opened can result in a fall in a credit score as they do not have any track record to evaluate creditworthiness.

Credit score calculators vary for each credit bureau although the final credit score calculation is mainly based on risk assessment criteria.


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