There are three major credit reporting agencies in the United States (Experian, Transunion and Equifax) which report, update and store consumers' credit histories. While there can be differences in the information collected by the three credit bureaus, there are five main factors evaluated when calculating a credit score:
- Payment history
- Total amount owed
- Length of credit history
- Types of credit
- New credit
Payment history counts for 35% of a credit score and shows whether a person pays his obligations on time. Total amount owed counts for 30% and takes into account the percentage of credit available to a person that is currently being used, which is known as credit utilization.
Length of credit history counts for 15%, with longer credit histories being considered less risky, as there is more data to determine payment history.
Types of credit used counts for 10% of a credit score and shows if a person has a mix of installment credit, such as car loans or mortgage loans, and revolving credit, such as credit cards. New credit also counts for 10%, and it factors in how many new accounts a person has, how many new accounts they have applied for recently, which result in credit inquiries, and when the most recent account was opened.