The process of determining the scores is a very difficult mathematical calculation. They take dozen of items into account. In fact, the bureaus do not even reveal the equation they use. They keep it very secret. Until very recently, no one except the bureaus themselves was even allowed to tell you what your score was. You could be sitting across the table from your mortgage broker and he was not allowed to tell you what your score was even if he had it in his hand! This has since changed, but the bureaus still want you to come to them first.
Basically, every piece of bad information on your report lowers your score. Major bad listings are collections, bankruptcies, consumer counseling, and foreclosure. Pretty bad listings are late payments. Bad listings are inquires, too high balances, and too many accounts. The computer then takes all this information and calculates a score to determine how risky you might be. I can’t go into detail about how much each item affects your score in this report because it would just be too long.
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It ain't that complicated:
"A FICO score is a way of measuring an individual's creditworthiness without requiring access to their income history or employment status. Originally developed by the Fair Isaac Corporation, the FICO score is now widely used by major credit reporting agencies. Credit card providers and banks will use a customer's FICO score to determine credit limits and interest rates.
Before a FICO score can be calculated, at least one credit account must be open and active for a minimum of six months. While this provides the bare minimum of information for calculating a FICO score, lenders prefer to see a minimum of three or four credit accounts stretching back at least 12 months. This is especially true for banks providing large lines of credit and mortgages.
The standard method for calculating a FICO score involves a number of weighted factors:
35% Punctuality 30% Ratio of debt being used to total available credit 15% Length of payment history 10% Ratio of installment to revolving debt 10% Credit currently applied for, number of credit checks, etc
A FICO score ranges on a scale from approximately 300 to 850. The median FICO score is around 720; scores above 725 are considered "good" while scores below 600 are considered "bad." Credit reporting agencies such as Equifax, Experian and Trans Union may report a different FICO score for the same individual. This is typically because different reporting agencies have access to different parts of an individual's credit history.
Certain factors can have an especially large impact on a FICO score. Unsatisfied court judgments and unpaid collections are especially damaging. Individuals clearing such items from their credit history should be aware that paying off a collection or judgment may, in the short term, actually decrease their FICO score as it makes the activity on the account more recent. Individuals with too many consumer finance company accounts may also find their FICO scores negatively impacted, as such accounts are widely viewed as being debt traps from which consumers have difficulty escaping.
In many countries, including the United States and Canada, credit reporting agencies are required to give consumers periodic free access to their credit history and FICO score."
http://www.wisegeek.com/what-is-a-fico-score.htm
You're welcome.
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