The three major reporting agencies, Experian, Equifax and TransUnion, use a combination of payment histories, outstanding debts, length of credit history, new credit and types of credit to calculate credit scores, as of 2015, notes HowStuffWorks. While each agency has its own version of credit scores, they are all based on the original formula established by the Fair Isaac Corporation.
Reporting agencies use payment histories to determine 35 percent of people's credit scores, states HowStuffWorks. Late payments, bankruptcies and bills sent to collection have negative impacts on credit scores, with more recent issues carrying more weight. Outstanding debt contributes 30 percent to consumers' credit scores, including things such as car and home loans and credit card debt. People who have maxed out their credit have lower credit scores, especially if they have done so on multiple lines of credit.
Credit reporting agencies use the length of time consumers have had credit to determine 15 percent of their credit scores, according to HowStuffWorks. Lenders believe that more information regarding credit history is a good predictor of future actions. The establishment of new credit contributes 10 percent to credit scores, with penalties for hard inquiries and opening new accounts, though these count temporarily against consumers. Types of credit are responsible for 10 percent of credit scores, as they can show lenders experience with options such as revolving credit lines and installment loans.