What factors affect the credit score calculation?

Credit score is the most important in financial market, especially when it comes to lending money. Credit score disclose you trustworthiness, you capability to repay your loan amount. Lower your credit score, higher the risk to your lender. Credit score generally range 350 to 850. Lenders have there own criteria for lending, but normally poor score is 500 to 600 an average score is 600 to 680. One with a score of above 720 will probably get best interest rates on a home mortgage.
Credit score is determined by each of the three major credit reporting agencies. It takes time to build credit score, it does not happen overnight it has to build with timely payments but one missed payments can damage you credit score instantly. Therefore it is necessary that you pay at least minimum payments on all of your accounts to avoid fall of your credit score. There are certain factors which influence your credit score calculation.
Payment history: this is major factor which influence calculation of credit score. This factor has 35% share in calculation of credit score. This factor take into consideration of how well are you paying your payments on time. It looks if there are any late payment history in your account and also looks at how often do you miss your payments. It takes the history of seven years. Payment history includes information on mortgage loans, credit cards, personal loans payments, it also looks for any account that were sent to collection agencies or any bankruptcy filling in past seven years.
Outstanding debt: this factor influence up to 30% of your credit score. This takes into consideration the amount of balance on each account and their limits on each account. If the outstanding debt it almost equal to your credit limit then it may affect your credit score. This calculation is done on account by account basis.
Credit history: this factor influence your credit score normally up to 15%. It requires your account to be active for long time with out any late payments. For this reason it is advisable to you that you do not close your credit card accounts but to discard the card to ban them from usage. This factor specifies that the longer the account is open, the better your credit score will be.
New credit applications: this factor influences your credit score up to 10%. This refers to no. of inquires are made to credit report. This inquires are of two types, hard and soft. Soft inquiry is when some one like an insurance company or an employee reviews your credit copy and hard inquiry is when creditor checks your credit report when you apply for any new finance.
Credit mix: the factor influences the remaining 10%. These include payment on different type of account like credit cards, mortgage, personal loans, and student loans. This is considered because a borrower who avails variety of credit know how to manage their debt.
These factor are interpedent, understanding each of them and its affects will help you know what goes into calculation of credit score and how does it impacts you.