What's In Your Credit Score
Not many people can tell what specifically influences your credit score. According to a recent survey reported on Cardweb, up to 45% of consumers think there is a connection between income and credit score.
The official FICO score, which ranges between 300 and 850, is actually decided by five and only factors.
- Timely Payments (35%)
- Debt Level (30%)
- Credit History Length (15%)
- Recent Credit Application (10%)
- Credit Types (10%)
Last time I check, my credit score is at 714. While it is not bad, it is only marginally higher than the national average. Apparently, I'm affected by my relatively short credit history, and a-bit-too-high credit application frequency (to exploit some hot deals). My credit score is gaining 5-10 points every month these days, and even at the current level, it is good enough to land me most of the best deals.
PFBlog Bonus: Check out NationalScore.com, a free web site by Experian that shows your the average US consumer credit profile, including credit score, debt, credit usage, minimal monthly payments, open credit cards, late payments and credit inquiries. (Check out PFBlog review too.)
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I believe the FICO credit scoring to be extremely flawed. I frequently float large amounts of "debt" (e.g. $10,000) on credit at 0% and invest that money in either my mortgage or high rate CDs. Because most credit cards only give you 0% for 12 months it becomes necessary to move on to a new card. So essentially, I get penalized for having "high debt" which is not really debt since I have the cash at hand and then get penalized for opening too many accounts too frequently. The only thing going is the fact that I'm never late on any payment.
