Your credit score is an important number when it comes to your financial health. And now the way your credit score is calculated … Navigate your next credit report with ease by learning how FICO and VantageScore calculate your score. Credit bureaus like Equifax and TransUnion compile your borrowing history to create credit reports, which are then used to calculate your score. In either case, the calculated score will also depend on which credit report the scoring model analyzes. Some services even let you check multiple credit scores at once. Although credit-scoring algorithms are industry secrets, credit-scoring companies do reveal the basics of what factors impact a score and how a credit score is calculated — and it all starts with your credit reports. How are credit scores calculated? Before you can improve your credit score, you need to know how your score is calculated. The most common credit score used is called your “FICO™” score, standing for Fair Isaac Corporation. Understanding credit scores and how they’re calculated will help you check into and improve your own score so you can have better credit when you are ready to purchase or refinance your home. Some services may offer you a version of your FICO ® Score, while others offer VantageScore credit scores. The three major credit reporting agencies don't necessarily use the same scoring software, so don't be surprised if you discover that the credit scores they generate for you are different. -Credit Counselor CALCULATE: FICO Credit Scores As a reminder, this pie chart below describes how your credit score is calculated using 5 different components of your credit history. Credit scores are calculated using information in your credit reports, including your payment history, the amount of debt you have, and the length of your credit history. By Donna Freedman Reviewed by Lauren Bringle, AFC® Your credit score has an enormous impact on your life and, ultimately, on your financial security. You’ve been assigned to be the credit counselor for Sam and Jenna, Every time you do anything that involves borrowing money, that information is passed on to credit agencies. How a Credit Score is Calculated. The software used to calculate a great number of credit scores was created by Fair Isaac Corporation (FICO), but VantageScore is also widely used. RICHMOND, Va. (WWBT) - Your credit score determines a lot in life: it can affect buying a car, a house or even getting a student loan. A credit score is a three-digit number based on the information from your credit report, and gives lenders an idea of whether you’re a good credit risk. FICO offers this credit score estimator, which we’ll use for the activity below. Here’s what FICO considers when creating your score and steps you can take to … Not surprisingly then, your score is based on what previous information is available. But it’s not always easy understanding why it is the way it is. Your credit score is a measure of how credit worthy you are and how big of a risk you pose to any creditors who lend you money.

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