Your credit score is a number that is used to determine the risk of lending money to a borrower. Mortgage bankers, rental companies, auto dealerships, and credit card companies are all common types of companies that will check your credit score before lending to you. Often, people are aware of what their credit score is, however, what they do not know is where exactly the number comes from. As your local currency exchange in Mount Prospect IL, we are sharing 5 elements that make up your score and how much weight each of them carries.

1. 1. Types of Credit Used – 10%: The types of credit, such as store accounts, loans, mortgages, and types of credit cards is examined when deciding your credit score. The total number of accounts you have is also looked at.
   2. New Credit – 10%: The number of new accounts you have and new accounts that you have applied for is considered when determining your credit score. If you have opened several new accounts lately, you could potentially be a greater risk to a lender.
   3. The Length of Credit History – 15%: The amount of time that you have been using credit is also an important factor. How old is your oldest account? What is the average age of all of your accounts?
   4. Amounts Owed – 30%: One of the largest factors in determining your credit score is how much you owe. How much of your available credit have you used? How much do you owe on specific accounts? Owing less is better, however, owing a little bit can be better than owing nothing at all. Lenders want to see that you borrow money and that you are responsible.
   5. Payment History – 35%: The most important factor of your credit score looks at whether you could be trusted to pay back the money that has been given to you by a lender. Have you paid your bills on time for each account? If you’ve been late, how late were you late? Have any of your accounts been sent to collections? Do you have any charge offs, bankruptcies, foreclosures, or judgments against you?

Your Local Financial Service Center

We are your local currency exchange in Mount Prospect IL. Our team at WSCE strives to be the best provider of retail financial services. We offer the fast and friendly service that Mount Prospect IL residents deserve. Our services are not limited to check cashing and money orders. We are an agent for the Illinois Secretary of State and can handle all of your vehicle and title needs. Have a financial question? Talk to your currency exchange in Mount Prospect IL.

Courtesy of: Investopedia