Just when you think you’ve got the calculation of credit scores figured out… you discover that credit companies can actually hurt your credit score – and it’s not what you are probably thinking. Of course, if you don’t make your payments on time, a creditor can report ysou as 30, 60, 90 or 180 days late which will eventually decrease your FICO score, particularly if you make a habit of making payments late. But creditors can also decrease your credit score through no fault of your own. Your FICO score is calculated on a number of factors, each carrying different weights. The actual formula used is “top secret”, but we do know the following is used to determine individual credit scores:

* 35% of your score is based on how you pay your debts, with your recent activity having the most importance. Paying bills on time of course is ideal, while declaring bankruptcy is the worst. If you pay your bills late consistently or have bills sent to collections, this will cause big problems in the credit score department. Continue reading →