You input information about your credit history and are given a score or range of scores that fit your profile. Credit score calculators are great tools to help you learn what to expect when applying for a new credit account. Knowing your score means you will know what interest rates are fair. That can save you a lot of money. Here is a guide to using a credit calculator.
Credit Score Formula
Before trying to calculate your credit score it is important to learn how that number is determined. FICO scores are calculated through the information on your credit report. About the 35% of your score comes from your payment history. This is listed under each account. Late payments lower your score. If your account gets to the point of 120 days delinquent your score will take a massive hit. 30% of your credit score comes from your debt to credit ratio. This is also called utilization. While installment accounts do have an impact on your score, it is revolving accounts that make up the bulk of this 30%. The closer your credit balance is to your credit limit the lower your credit score will be. The length of your credit history accounts for 15% of the score. This is computed by calculating the average age of all accounts. Opening a new account will lower this number and consequently lower your score. The types of credit you have account for 10%. Your credit report should have a mix of installment and revolving accounts. If you don’t have any credit cards your score will suffer. The last 10% comes from the credit inquiries you have. Inquiries impact your score for up to two years. It is important to know that recent negative impact your score more than older negatives. If you have a late payment from four years ago it won’t hurt livescore you nearly as much as one from a year ago.
Information Needed to Obtain Score
No matter what tools you use to estimate your credit score you will need certain information. The first step is to put in the age of your accounts. You will usually be asked to add the date of your oldest account as well as your newest account. This provides the score calculator with the approximate age of your credit history. The next step is putting in the types of accounts you have. You will be asked how many open revolving and installment accounts you have. You will also be asked if you have any accounts that are charged off or in collections. In addition, if you have any judgments, bankruptcies, serious delinquencies, or other credit issues you will list those as well.
Once the credit score calculator has your basic information, it is time to list specifics. A credit score calculator will need the credit limits and balances of all of your credit cards. You just have to add the limits from each of your cards as well as the balances. With that information the credit score calculator determines your credit utilization. You may also be asked to add the balances and original amounts for your installment loans in order to get a more precise score.
The next step is adding your payment history. You can list any late payments you have on your credit report. In order to get an accurate score, you can list how many days late you were on the account as well as how recent your late payment was. Different credit score calculators will ask for different levels of detail regarding payment history. If you can provide more details you will receive a better indication of your score. Lastly, you will be asked how recently you applied for credit.
Estimating Your Score
If you provide all of the information above, you will receive a fairly accurate assessment of your credit score. The questions asked by credit score calculator tools cover all of the basics. It will calculate your score by evaluating the payment history data, types of accounts, age of accounts, and debts. After providing you with a score you will also receive a detailed breakdown of how it was determined. If the issue was not having enough diversity in your accounts you will see that in the breakdown. The breakdown will help you learn what you need to do to increase your credit score.