Question:

What are the consumer credit rating factors and how to build the best credit rating?

Answer:

If you try to build the best credit rating you can you should consider the credit rating factors that determine your FICO score.

FICO is an alternative name for a credit rating score and stands for Fair Isaac Corporation - the pioneer in consumer credit scoring. Even though there are other proprietary credit scoring systems, the standard FICO credit rating is what businesses and employers seek to know about consumers and employees, and the FICO scale is what the major credit reporting companies use to evaluate consumers.

Building the Best Credit Rating: Most Important Credit Rating Factors

Since credit ratings are such a crucial part of everybody's life affecting things as employment and consumer financing, be aware of the factors that have the greatest impact on your credit score.

Even though the Federal Trade Commission keeps the FICO formula a secret, the following factors are known to affect your credit score:

  • 35% of your score is based on how you handled debt so far. Having history of successfully repaying debt, and quickly, is the most preferable course of action.
  • A credit rating factor with 30% weight is your indebtedness. Have in mind here that a bad credit obligation even for a very small amount (say, $100) can prevent you from building best credit and even from taking a mortgage.
  • Another credit rating factor with significant weight (15%) is the type of credit you have. Basically, what matters is having secured and non-secured debt combined. If you have always been only a renter, you will need to change that to get the best credit rating score.
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