What Goes Into Your Credit Score?

It's not just about payment history. Several things are taken into account when your credit score (or FICO score) is calculated.

Two Cents on Twitter: @twocentspbs

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Two Cents was created by Katie Graham, Andrew Matthews, Philip Olson CFP® and Julia Lorenz-Olson and is brought to you by PBS Digital Studios. We love dropping some knowledge on all things personal finance and helping you make better money decisions.

Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson
Directors: Katie Graham & Andrew Matthews
Written by: Julia Lorenz-Olson and Andrew Matthews
Produced by: Katie Graham & Amanda Fox
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Music by: APM

Sources:

[Lonerprime]

I am from India and I initially I had no idea why YT even recommended this to me. I mean, most of the time the things you covered didn't even apply to my country. But then I realized, even though the cover might look different, the book inside is pretty familiar i.e basic economics. As a single guy about to start my own life, I really appreciate these tips and guides both of you put out. Especially the innovative spin you put on it to mitigate any influx of boredom. These are the kind of things I wish they would have taught me back in school/college. Well, long live the internet that allowed someone like me to connect with content made by you folks from so far off. Keep up the great work.

[triad]

I really like that you said the fico score is a relationship with debt.

[BrawlBros]

I'm glad YouTube recommend this for me, it's so helpful and easy to understand!

[thefozzybear]

A co-worker asked me to lend him a pen, I asked him what's his credit score.

[gotperfectscoreusingroycre]

I had improved my credit score from 500 and up to 775. I highly recommend this company they have a good reputation and they follow through with what they say thank you for your services Roy.

[pynklady]

I really wish this was around when I was 18 omg I made SO many mistakes in my 20s out of ignorance 😒

[namkeenkumar]

the only youtube I have ever come across that has zero downvotes even after 1500 views... awesome

[nevanread]

I am 26 years old and my credit score hit a 795. I am so proud of this achievement 💞☺️🔥

It's 796 now

[mylifeisamememylifeispathe]

I love this channel so much! I hope you guys grow exponentially & help many many people.

From the bottom of my heart thank you and merry merry Christmas 😊🎄

[RangerRuby]

First! This channel is awesome, and not being old enough to have a credit card this video is really great in explaining them! I'm always looking forward to the next video this channel post! I love the graphics and the script! It mixes entertainment and information! Now I know all about Credit Scores!

[IzhanStark]

You deserve every bit of appreciation for your efforts and the knowledge you provide. You one one of the very few channels who actually deserve a lot more because you teach us what school never thought us.

[avocademy]

You're assuming I even have $100 lol

[danfg]

I like how they reduced the cringe of having them both in frame, one talking and the other not knowing what to do or where to look at, and they finished well, with a straight cut to them both saying "... and that's our two cents". Nice editing!

[Martin-rifg]

This system blows my mind. The US and Canada are the only countries that use a credit score, and tbh I find it absolutely absurd.
You need to have an arbitrary score calculated from things that are the very contrary to what you're trying to achieve...
Like, you need to borrow money (that you might not need in the first place), which is equivalent to be irresponsible with money, to show that you're going to be responsible with money when you're actually going to need that money lent to you.
Also, that still didn't prevent the 2008 crisis because banks didn't do their due diligence, which is to say that credit score doesn't work and doesn't mean anything.
By contrast in other countries banks just check what you've actually been doing with your money if you have a steady income and how good are you with your budget, which makes a lot more sense. Also, in most other countries, credit is not a thing, so you only spend money you have (except to buy a house), which is a much better system because people don't go into debt.

But about the channel itself : love you guys, and love what you're doing! you're making an amazing job at explaining the completely backward thinking NA model ^^ (which as a foreigner is kinda important to understand when you come over :D)

[connorsmith]

Oh my gosh, you guys listened! I suggested this video in the comments of the last video! Thank you for making it! I really enjoyed it, and it was full of helpful information!

[sumitphogat]

I got nothing to add but I got to say this: love you guys! You guys are awesome! :)

[firstlast-cseg]

You downplay how problematic the credit bureau are but their fallibility should not be understated. The way they can get things wrong, like mixing you up with another person etc is compounded by how hard it can be to fix those mistakes and how they have zero accountability to the people they judge with their scores. Their real customers are those who would check credit history, not you.

[darkovdarkov]

I worked in a fintech company that gives out credits. And I was working specifically on the software the staff uses to evaluate clients for credits. From what I've seen there was a lot more then just this. Of course, we were using a special credit score model, created by the company co-ceo. It involved statistical data, like what job you have, your age, even gender (and quite a few others too). The most important was the credit score of course. The credit scores explained in this video, to which countries do they apply/cover?

[pspreng]

My son wanted to buy a new car and asked his grandmother to pay for it to get a better price and interest rate. However my mom had no credit rating because my parents had never borrowed any money for anything. They always waited until they had the cash for cars, furniture and even the two houses that they bought. The few credit cards they owned were just for convenience and were paid in full every month. So you don't need credit if you are careful with your finances.

[alypialpha]

Also keep in mind the amount of debt you have. When I got out of college, I had an excellent credit score, but couldn’t get credit cards or loans because my DTI (debt-to-income) was high due to my mountain of student loans. Making debt payments on time didn’t mean anything if I had too much debt in the first place.