What determines your credit score?

A credit score is an essential determination of creditworthiness. These 3 digits impacts you in various ways in your while when coming to a healthy personal finance.
The most common credit-reporting index was presented by Fair Isaac and Corporation (FICO), now FICO score is provided to credit lenders, by credit reporting agencies. In another meaning, FICO is your certification for lenders evaluate your risk in credit world.

For a USD 300,000 mortgage, individuals got a FICO score from 750 and above would pay less USD 100 per month than people whose credit score is at 660 in 30 years.

Related story: 5 Essentials to build or fix your credit score

Things determine your credit score

Credit scores is designed to range from 300–850. The higher score means a lower risk for lenders if they grant a credit to an individual. In FICO report, 13% of US residents get more than 800, and 1% hit a perfect score of 850. In this credit reporting system, each factor weights differently from others.
1. Payment history: 35%
2. Credit utilization: 30%
3. Credit history length: 15%
4. New credit: 10%
5. Sort of used credit: 10%

Generally, getting a good credit score is not a normal challenge, because keeping a personal finance in balance relates to many angles of your daily life: primary income source, 2nd income, all expenses, occasional expenses, interest rate, issuers, etc. Credit history is also an important factor, getting a positive credit status in 10 years would grant you a score of above 800.
Keep in mind, those who get 850 score won’t be different from others are at from 700 above in basic benefits. Yet the best APR rates are offered to 760–850 people. Thus, you are better to plan for a credit score of 700 at least from now onwards.