How credit agencies view you (conclusion)
Welcome back. CLICK HERE if you missed part three of this article.
You’ve made it to the very end of “Repair Your Credit,” and let’s keep going to the end by taking a continued look at what credit agencies look at when they produce a credit score for you. That score determines how likely you are to get a good deal on a credit card, but typically has no bearing on whether or not you can be approved to receive a payday cash advance in Connecticut loan.
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What are your spending habits?
How you use your credit is also a criteria examined by the credit bureaus when they develop your credit score. When looking at your credit accounts and account balances, they are able to determine just how conservative you are as a consumer spender. If your credit lines are maxed out or close to your available credit limit, you would be considered much more of a risk.
In contrast, avoiding a revolving credit balance by paying your consumer credit cards off at the end of each month or billing period will show you to be a far more conservative spender and therefore less of a risk to lenders. Just because you make your payments on time does not mean you automatically have good credit. Your spending habits can come back to bite you in more ways than one.
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Age of your credit accounts
It is difficult to determine exactly what model each of the three credit bureaus use to score your credit, as this information is proprietary and confidential. However, the length of time over which you have established positive credit history is likely a key factor in your score. Establishing good credit is a lifestyle of financial responsibility. Your score is determined by analyzing many factors, including your time in good standing.
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Number and frequency of creditor inquiries
Every time you apply for a consumer credit card, car loan, home mortgage etc., you incur a credit inquiry on your report. A credit inquiry is a creditor obtaining your credit information via your consent and social security number. The more inquiries that you have over a given period can greatly affect your credit score. New lenders see a barrage of financial responsibilities for which you may become responsible. This makes you seem a little more risky, as lenders may believe you are overextending yourself.
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Credit variety
There are different types of credit for which you can be approved. Credit bureaus look for a variety of installment loans and revolving loans. Credit bureaus like a mixture of auto loans, credit cards, retail cards, etc. Installment loans are loans that a person borrows once and makes payments until the balance is paid in full. Revolving credit are credit loans that have a revolving balance, with regular payments made. Each time a payment is made, more credit becomes again available for you to use.
Maintaining your credit is an area of your life that you cannot afford to disregard. On your mortgage alone, you can save tens of thousands of dollars on a thirty year fixed mortgage by having a fair credit scored over a poor one, or you can save even more with an exceptional credit score.
Bring mistakes to their attention
Bad credit is a bleeding wound in your financial affairs. It takes time to recover from a serious wound (or black mark on your credit history), so there’s no time like the present to facilitate healing. Unfortunately, even with all you’re doing to improve your credit score, the credit bureaus themselves can sometimes make a mistake on your credit report. If you see a mistake they’ve made, immediately call them on it. It helps to have mistakes removed from your report when you’re on the road to “Repair your credit!”
