5 Ways Your Credit Score Is Calculated

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When you want to check your credit score before applying for a car loan, a mortgage, or an apartment, you contact Equifax or TransUnion and they send you a free report by mail or, for a fee, an instant report online. There you find a number between 300 and 900, a number that tells potential lenders how big of a credit risk you are. That number will determine whether or not you get approved for the loan. or it may affect the interest rate you’re offered.

The lower your credit score, the higher the interest you can expect to pay, as you’re seen as a higher risk borrower. A credit score of 500 is considered “Poor,” a score of 700 is “Good,” and around 800 and higher is considered “Very Good.”

But what goes into calculating this number that can define your financial future? There are 5 primary factors and at David Sklar & Associates, we wanted to walk you through them, as well as how much weight they have on your score.

#1 Payment History (35%)

The most important factor in your credit score is your payment history. Every time you’re late to pay a utility bill, make a mortgage payment, paying your rent, or you miss a minimum payment, your credit score takes into account whether you were over 30, 60, or 90 days late. It also shows if you’ve had any debts go into collections or if you’ve ever faced foreclosure or bankruptcy.

#2 Debt Amounts (30%)

This is how much money you currently owe, whether it’s a phone bill you haven’t paid yet, your credit card balance, or the balance on your mortgage. It shows potential lenders how much of your credit limit you’ve already used as well as what proportion of a debt you’ve already paid back. Having zero debt is not necessarily as good as having some debt that’s paid back regularly, as it shows a pattern of behavior.

#3 Length of Credit History (15%)

This is how long you’ve been using credit and it plays an important role, too. An 18-year-old who just paid off their first credit card balance isn’t going to have the same kind of credit score as someone in their 40s who’s never missed a mortgage payment or a hydro bill.

#4 New Credit (10%)

Opening a new credit account may be necessary, but it’s generally a good idea not to open a new credit card before you apply for a major bank loan. New credit accounts will count against your credit score; use them and pay them down to improve your rating.

#5 Types of Credit (10%)

Your credit score improves when you use multiple types of credit, i.e., not just credit cards, but lines of credit, mortgages, car loans, etc. A Licensed Insolvency Trustee at David Sklar & Associates can teach you what kind of credit mix can help your score.

Insolvency will have a major impact on your credit score as well, and the impact is one of the differences between bankruptcy versus Consumer Proposal, a process which involves agreeing to pay a smaller amount of debt to your creditors because you’re insolvent. A Consumer Proposal will be on your credit history for three afters after you finish paying it off, whereas a bankruptcy takes six to seven years to clear. If you can’t decide which one is best for you, David Sklar & Associates are here for you, to advise you on the path forward. The decisions you make now will affect your credit score for years to come.

If you’ve got a poor credit score and you’re struggling to pay down debt, learn what a bankruptcy trustee can do to get you out of the hole and back on track. You can eliminate your debts and rebuild your credit score with a bit of help, patience, and a financial plan.

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt, call us at 1-844-962-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

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Great experience i was in financial trouble and someone of my friends recommended this company. Cori is a wonderful and welcoming person she did a very good job and came up with a smooth and flexible monthly payment after the reduction. i highly recommend this company. Thank you David sklar and special thanks to Cori.❤️🙏🏻
Jasmine Joseph
22:08 13 Jan 23
Met up with Mr. Jason Sklar to discuss more in person, very thorough and clear. He is very kind and thoughtful, I will be referring anyone with the same situation to David Sklar & Associates.
Ariel Domingo
02:33 29 Dec 22
I was a reck talking yo Jason Sklar was easy comfortable he explained everything and put my mind at ease I would recommend the team od sklar to everyone. I have already talked to my ci workers about them
kevin mcweeney
01:13 22 Dec 22
The team at David Sklar & Associates is fantastic.I worked with Jerry whom not only made - what seemed like intimidating process to initiate at first - comfortable.He made everything transparent and took the time to explain the process every step of the way.He was kind, attentive, and professional. Everything was made straightforward and stress free and we found a solution together that worked.Thanks to Jerry and the team.
Jordie Angiolillo
18:22 21 Dec 22
From day one till the end which is today😁 DavidSklar gave me a 5star service and treatment. And I will 100% recommend him and his Associates. This is the best Christmas present ever! Thank you David! More business to come! Merry Christmas and a Happy New Year!!!
barbee diaz
16:37 16 Dec 22
I FOUND DAVID SKLAR & ASSOCIATES BY GOOGLING "BANKRUPTCY" (EARLY NOV. 2021). ON NOV.4, 2021 I HAD A MEETING WITH CORI NARON AT HER OFFICE AT ST CLAIR ANDBATHURST. HER POSITIVE APPROACH TURNED ASTRESSFUL SITUATION INTO A STEP BY STEP UNDERSTANDABLE PROCESSON SEPT. 23, 2022 I OBTAINED MY AUTOMATICDISCHARGE FROM BANKRUPTCY AND MY CERTIFICATE OFDISCHARGE.THANK YOU CORIBRUCE BURGESS
bruce burg
21:35 02 Dec 22
Jerry was wonderful and provided superb service. He is very knowledgeable, trustworthy, and made an intimidating and shame filled time in my life stress free. I hesitated for a long time to take the next step, but Jerry answered all questions, was patient and made the process effortless. I am eternally grateful, and highly recommend Jerry’s services.
M J
18:41 01 Dec 22
Jerry was professional and was easy to deal with
Debbie Asquith
00:09 29 Nov 22
I was quite nervous and a little embarrassed that I needed financial advice. I met with Jerry Janiec and he was very helpful. He made me feel comfortable and explained everything in easy to understand terms so that I understood what my options were. I would recommend David Sklar & Associates for anyone in my position.
Melissa Blackburn
19:53 17 Nov 22
I was fortunate enough to be referred to David Sklar & Associates Inc. by a family member. Now in the10th month of a Consumer Proposal process, I am very impressed with the organization, professionalism and impeccable customer representation that I have experienced. To this effect, I amparticularly thankful to Jerry Janiec and Rhoda Lewis for their excellent work.
Suzanna Vaclavik
12:21 16 Nov 22
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