First comes your credit report. Three credit reporting bureaus, Experian, Equifax and Transunion, independently gather information from landlords, government agencies, credit card issuers, and other creditors.
The reports are divided into four main sections, personal information, credit history, public records, and credit inquiries from the last two years. The results are given numerical weights, including on-time and late payments, income to debt ratios, too many credit inquiries, and more.
It's the total that generates the credit score using an algorithm by the Fair Isaac Corporation.
Bad reports, such as late payments, missed payments and defaults, judgments and liens can stay on your reports for seven to ten years. Even if you've paid what's due or released the liens, the report stays for years, but the score will improve if more negative data doesn't show up.
Credit scores range from 300 to 850. According to Bank of America, the average American's credit score is 692. Any scores under 620 could make it hard to get a mortgage, while anything above 700 is attractive to lenders