There are four basic factors which determine credit-scores, everything on your report fits into one of these five categories.
Factor I.
If the account is in good standing, your report will have a positive impact on credit-scores.
This is one of the strongest factors on your report.
Factor 2.
Derogatory accounts on your report.
Any account which was not paid on time or not paid in full, charge-off, etc.
Will be considered a derogatory item on your report.
This will have a negative impact on your score in proportion to the extent to which the account is derogatory.
For example an account which is mostly paid in full but was 30 days late on several occasions he has a slightly lower impact than an account which was 90 days late until it was charge-off.
Factor 3.
Inquiries on your report.
Whenever you have your credit pulled by a company which you wish to borrow money from this will create an inquiry on your report.
This indicates that somebody was looking at your credit score and report for the purpose of potentially giving you a loan.
If you have more than a few of these they will begin to have a negative impact on your score as they indicate that you are seeking out credit and that you may be less able to pay back all of your debts as your debt to income ratio worsens.
Factor 4.
Debt used to debt available ratio.
Typically if you are using most of the revolving debt available to you this is an indication that you are starting to max out your available resources and that you may begin to experience difficulty paying off your lenders in the future.
Typically you want to keep the amount of debt which you are using at any given time at around 15% or less of the amount that is available to you.
This indicates that you have a good handle on your debt and are more likely to be able to pay back any money that you borrow and has a positive affect on credit-scores.
Factor I.
If the account is in good standing, your report will have a positive impact on credit-scores.
This is one of the strongest factors on your report.
Factor 2.
Derogatory accounts on your report.
Any account which was not paid on time or not paid in full, charge-off, etc.
Will be considered a derogatory item on your report.
This will have a negative impact on your score in proportion to the extent to which the account is derogatory.
For example an account which is mostly paid in full but was 30 days late on several occasions he has a slightly lower impact than an account which was 90 days late until it was charge-off.
Factor 3.
Inquiries on your report.
Whenever you have your credit pulled by a company which you wish to borrow money from this will create an inquiry on your report.
This indicates that somebody was looking at your credit score and report for the purpose of potentially giving you a loan.
If you have more than a few of these they will begin to have a negative impact on your score as they indicate that you are seeking out credit and that you may be less able to pay back all of your debts as your debt to income ratio worsens.
Factor 4.
Debt used to debt available ratio.
Typically if you are using most of the revolving debt available to you this is an indication that you are starting to max out your available resources and that you may begin to experience difficulty paying off your lenders in the future.
Typically you want to keep the amount of debt which you are using at any given time at around 15% or less of the amount that is available to you.
This indicates that you have a good handle on your debt and are more likely to be able to pay back any money that you borrow and has a positive affect on credit-scores.
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