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One of the most popular methods of calculating a credit score is using the FICO numerical scale. This is done to help put a rating that pertains to various aspects of your credit rating.

What it Means

The credit score scale determines whether or not you have poor, fair, good, excellent, or perfect credit. This is what will established a variety of things, such as how much interest you would pay on a credit card balance or how much of a down payment would be required for a home loan.

It might make or break a merchant’s decision to give you a car loan or to provide you with cell phone or ISP service. It is used to help gauge a variety of financial decisions.

Credit Score Calculation

To sum it up, 620 means good while below that is fair or poor. 723 is considered very good and 800 to 850 is considered perfect to almost perfect. A person with a very high credit score may be thought of as one with “A-1 credit.”

Similar point systems are used by Experian (the Plus score). There also is what is called the VantageScore. You may have heard of these but it is the FICO one that is used most often.

Scoring Factors

Certain aspects of your credit report make up for varying percentages of your credit score. The breakdown is generally as follows:

Payment history-35%
Debt to income/assets ratio-30%
Length of credit history-10%
Types of credit-10%
Number of inquiries-10%

This is subject to change but as of now this is common knowledge among consumers and experts. This is generally speaking the major components of credit score calculation.