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Posted on May 11, 2008 by Amanda Hash | Posted under Credit
Looking For The Reasons For Your Low Credit Score?
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As stated above, a low or a high credit score will depend on several factors that alter your credit report. However, among these factors there are five that can be considered the most important ones: Credit History (Missed and Late Payments or Timely Payments), Length Of Your Credit History, Overall Outstanding Debt, Types And Number of Open Accounts And Lines of Credit and Recent Credit Pulls. Credit History: Payment Occasion The timing when it comes to repayment is essential. It is very important to keep all your debts at day. Otherwise, your credit score will suffer greatly. Nothing will happen if you pay late a bill once, but if you make it customary to pay your bills late, your credit history will include this fact and therefore, your credit score will drop dramatically. It is always better to ask the financial institution to change your due date so you can pay on time. If late payments are a negative influence to your credit score, missed payments are worse. A single missed payment drops your score almost immediately and continued missed payments lead to default and bankruptcy which can ruin your credit. Length Of Your Credit History If you have a short credit history, a delinquency will impact with more strength on your credit score than if you have a longer credit history. Nevertheless, it is important for you to understand that the last six months of your credit report (recent credit history) are probably the most important entries and the ones that the lenders focuses on when considering approving or declining you for a loan or other financial product. Overall Outstanding Debt The amount of debt you have accumulated will affect your credit score. If it surpasses your assets too much or if it implies that your income is heavily compromised, it will lower your credit score. Also it is best if your debt is not due in a short period of time but spread over many years. That way, your debt exposure will not affect your credit score that much. If you have this problem, you can solve it by refinancing or consolidating your debt. Open Accounts And Lines Of Credit Too many open accounts and lines of credit will affect your credit score negatively, but the type of account is also important. It is not the same to have a checking account with a small balance than ten lines of credit with high balances. High number of open accounts with high balances is the worst combination that you can imagine if you want to keep a good credit score. Recent Credit Pulls Recent credit inquiries will also affect your credit score negatively if there are too many of them. If you apply for a bad credit loan and get declined, do not try again right away. Take your time and try to improve your score. And only after a while you should try and apply again. About The Author: Amanda Hash is an expert financial consultant who specializes in Personal Loan Approval and Unsecured Bad Credit Loans. By visiting www.yourloanservices.com/ you'll learn how to get approved and recover your credit. |
Tags: PERSONAL FINANCE TIPS, CREDIT REPORT, HOW TO, IMPROVE CREDIT SCORE, LOW CREDIT, POOR CREDIT, BAD CREDIT
