How does credit scores work?
I was asked this question and I don't know the answer, I think I should or everyone should but I ain't got a clue! How does you score raise and what way are points added/earned? Example, lets say you have a monthly car/mortgage/credit card payment or something else, each month you make a payment does that add points to your credit score or is it done some other way? Thanks!
- Steve DLv 79 years ago
To a certain extent, yes it does. Your credit score is made up of a number of different factors, such as your payment history, your available credit ratio, etc. Each time your credit report is updated, the information in your credit report is used to recalculate your credit score. The folks who calculate the score do not release the exact algorithms/formulas used so there is no exact way of telling how much your score might change based upon a particular action (such as making an on-time payment). It is actually possible for you to make all your payments on time during a month and have your score go down due to other factors.
- Anonymous9 years ago
A credit score is based on a 12 month activity and usually goes up between 5 to 10% month providing you are paying on time. A good score is between 660/749 and will probably take 24 months of activity to get there. Excellent is 750/840 will probably take another 12 months to get to the level.Source(s): Retired bill collector 35 years