Credit Score Procedures

Credit scores help lenders determine whether you are a worthy borrower. Your credit score is derived from information obtained from your credit report each month. Creditors submit information to credit bureaus related to your payment history and current balance. Individuals looking to improve their credit scores should learn credit scoring procedures so they can find areas to make the biggest impact.

Percentages

Credit scores are determined by many factors, but there are five primary categories. Each category carries a different weight based on its importance to creditors. The larger the percentage of a risk factor, the more it can help or hurt your credit score. "For particular groups--for example, people who have not been using credit long--the importance of these categories may be somewhat different," explains the MyFICO website.

Payment History

Payment history is the largest factor used in calculating your credit score and accounts for 35 percent of the score. It includes "account payment information on specific types of accounts, e.g., credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.," states myFICO. You must pay as agreed on your accounts to ensure positive information is reported monthly. Your credit score will increase each month that positive payment information is reported to the credit bureaus.

Overall Report

Available information on credit scoring procedures are estimates that apply to the general population and not to specific credit profiles. "As the information in your credit report changes, so does the importance of any factor in determining your FICO score. Thus, it's impossible to say exactly how important any single factor is in determining your score," explains MyFICO. The percentages used to assess which factors affect your credit score are generic templates that can drive up your score by a few points or by dozens of points depending on your credit profile.

Time Frames

Creditors report information to the credit bureaus monthly. If you dispute an item on your credit report, the creditor has 30 days to respond with documentation supporting the information. This means that even though you dispute information today, it could be several months before your credit score is updated to reflect the changes.