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Credit Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories as outlined below.  The percentages in the chart reflect how important each of the categories is in determining your FICO score.

These percentages are based on the importance of the five categories for the general population. For particular groups - for example, people who have not been using credit for very long - the importance of these categories may be somewhat different.

Credit scores range from 300 to 850.   Higher scores mean less risk for lenders, lower scores indicate increased risk.  Most lenders have a minimum credit score requirement of around 620 although lower scores might be accepted with additional compensating factors such as a significant amount of savings or a large downpayment.

There are three major credit reporting agencies?Equifax, TransUnion and Experian.  Creditors may report to one, two or three bureaus or may not report at all.  Most major national lenders report to all three while smaller local companies may report to only one.

The variance in the information reported to each bureau combined with the fact that each of the three bureaus uses a slightly different formula to calculate scores means that your scores from the three bureaus will most likely not be exactly the same.  The lenders will use the middle of the three scores as you representative score when evaluating risk.

Your credit score is based only on information in your credit report?payment history, amounts owed, length of credit history, new credit, types of credit used and public records such as bankruptcies, judgements or liens.  It does not take into consideration your employment history, the amount of money you have saved or the amount you plan to put down on the home you are buying although those factors may come into play in the overall underwriting of the loan.

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