The calculation of credit scores is a complex process that involves several factors. The most widely used credit scoring model is the FICO score, which ranges from 300 to 850. Here's a breakdown of the elements that influence the FICO score:
- Payment History (35%): This factor considers whether you have paid your past credit accounts on time.
- Amounts Owed (30%): This refers to the total amount of credit you owe and how it compares to your overall credit limit, also known as your credit utilization ratio.
- Length of Credit History (15%): The longer your credit history, the better it is for your score.
- Credit Mix (10%): This considers the mix of credit accounts you have, such as credit cards, retail accounts, installment loans, mortgage loans, etc.
- New Credit (10%): This includes the number of recently opened accounts and recent inquiries for new credit.
Understanding these factors is essential to learn how to build credit fast. Now, let's discover some of the fastest ways to build credit from scratch.