 TITLE: Does Your Credit Score Start at Zero? CONTENT: How Your Credit Score Is Calculated\n-----------------------------------\nTo understand why your first credit score is likely to be somewhere in the middle range, it's important to know how credit scores work. Your credit score is calculated using five factors:\n1.  **Payment history**: The most important single factor in your credit score is whether or not you pay your bills on time. Payment history accounts for 35% of your FICO® Score, which is why it's so important never to miss a payment.\n2.  **Credit utilization**: Credit utilization refers to how much of your available revolving credit you're using. Your credit utilization ratio is calculated by dividing the amount of revolving credit you're currently using by the total of all your revolving credit limits. Aim to keep your credit utilization ratio under 30%, both overall and on each credit account, which you can do by keeping balances low or at zero. Credit utilization accounts for 30% of your FICO® Score.\n3.  **Length of credit history**: How long you've used credit accounts for 15% of your credit score. This takes into consideration the age of each account on your credit report as well as the average age of all your open accounts. The longer your credit history, the more information credit bureaus have about you, which generally translates into higher credit scores.\n4.  **Credit mix**: There are two main types of credit. With installment credit, which includes car loans, personal loans, mortgages and student loans, you borrow a set amount and make a fixed monthly payment to pay back the total by a specific date. The other type, revolving credit, allows you to spend up to a certain credit limit and either pay the balance in full each month or carry it over as long as you make a minimum payment. Credit cards, store cards and home equity lines of credit are examples of revolving credit. Showing that you can manage different types of credit accounts responsibly will help your credit score. Credit mix accounts for 10% of your credit score.\n5.  **New credit**: The number of new credit accounts you've recently opened, as well as the number of hard inquiries on your credit report, accounts for 10% of your credit score. A hard inquiry occurs when a lender reviews your credit report to help them make a decision about your application. Multiple hard inquiries within a short time indicate greater risk and can hurt your credit score. END