What is your credit score and how does it affect you?
Getting your Credit Score report can help you:
- Understand your total credit picture.
- Improve your credit with a personalized analysis of your
report.
- Learn what factors may influence your credit rating.
- Know your credit standing before applying for credit.
- See how your credit score compares to other US consumers.
About your Credit Score:
Credit scores are based on the information in your credit
bureau record. The majority of CreditXpert Credit Scores(TM)
are between 400 and 900. Higher scores are better. With a
high score, you have a good chance of getting the credit and
loan(s) you want. Keep in mind that when lenders consider
a loan or credit application, they generally ask for more
information because credit scores are not the only factor
they use in making decisions. Typically, this includes personal
data (such as income and monthly payments) used to determine
your ability to pay.
What your Credit Score means:
Currently, your CreditXpert Credit Score(TM) will make it
difficult for you to get the best offers, especially for credit
cards. Be prepared to pay higher fees and interest rates,
as well as make deposits and down payments. Also, you may
not be able to get high credit limits and/or high loan amounts.
However, if you demonstrate that you are reliable by always
paying your bills on time, your credit score can improve significantly
within a year.
What this Means to You:
Both negative and positive factors influence your credit score.
The most important factors of each are listed below, in order
of importance. Remember that these factors vary in how strongly
they impact your credit score. For example, if you have a
very high credit score, the negative factors in your analysis
are likely to have a small impact. The same is true for positive
factors if you have a very low credit score.
What factors lower your credit score:
Payment History : You owe $19,500 on accounts for
which you have missed a payment.
This only includes your open accounts. This is making your
score lower. Missing payments is a negative factor. Some cases
are worse than others. However, if you have not missed any
payments recently, lenders may think you have become responsible
and will no longer miss payments. Also, missing payments on
only a few accounts is not as harmful as missing payments
on most or all of your accounts, because lenders realize that
many people miss a payment (or pay late) once in a while.
Also, missing a single payment is not as harmful as missing
several consecutive payments because many lenders consider
missing 3 or more consecutive payments as an indication that
you may never repay them. Finally, it is not as harmful to
miss payments on accounts with low balances rather than high
ones because lenders stand to lose less money on low balances
if they remain unpaid.
Bankruptcies : You have one or more bankruptcies listed
in your credit report.
This is making your score lower. Any record of bankruptcy
in your credit report is a very negative factor. A bankruptcy
is less harmful to your credit score if it occurred many years
ago (rather than recently) because lenders may believe that
you regained control over your financial responsibilities.
In any case, bankruptcies will very significantly impact your
ability to obtain new credit, and new loans will likely involve
a deposit or high fees and interest rates. Note that bankruptcy
records on credit reports usually disappear 7 to 10 years
after the filing date of the bankruptcy. When this happens,
it will have a positive effect on your credit score.
Length of Credit History: The average age of the account(s)
in your credit report is 7 years and 5 months.
This is making your score lower. Having had credit accounts
for a long time is a positive factor because your history
gives lenders information to evaluate how you typically use
credit and repay your debts. Credit reports with approximately
30 years of history are considered optimal. Meanwhile, up
to 7 years of credit history is considered short, and less
than 3 years of history is considered too little. It is worth
noting that your accounts may have been open longer than your
report suggests, if lenders were slow to report them to the
bureaus. What matters is how long your accounts have been
in your report.
What factors raise your credit score:
Credit Accounts: You have 5 accounts listed in your
credit report. This is making your score higher. Having accounts
is a positive factor because it gives lenders information
to evaluate how you pay your bills. However, having too many
accounts is usually considered a negative factor because lenders
worry that you are spending (or preparing to spend) beyond
your means, even if you have not missed payments in the past.
Also, if you do not have credit (a negative factor), obtaining
your first credit cards may be difficult, and it may involve
high fees and interest rates, as well as low credit lines.
Note, finance trades (debt consolidation accounts with high
interest rates) are considered a negative factor, because
they are often associated with troubled credit histories.
Payment History: Last reported month, you did not
miss a payment on any revolving account. This only includes
accounts updated in the past 3 months. This is making your
score higher. Missing payments is a negative factor. Some
cases are worse than others. However, if you have not missed
any payments recently, lenders may think you have become responsible
and will no longer miss payments. Also, missing payments on
only a few accounts is not as harmful as missing payments
on most or all of your accounts, because lenders realize that
many people miss a payment (or pay late) once in a while.
Also, missing a single payment is not as harmful as missing
several consecutive payments because many lenders consider
missing 3 or more consecutive payments as an indication that
you may never repay them. Finally, it is not as harmful to
miss payments on accounts with low balances rather than high
ones because lenders stand to lose less money on low balances
if they remain unpaid.
Credit Usage: You are not using any revolving accounts
at more than 70% of their credit limit. This only includes
your open accounts for which the credit limit/loan amount
is available. This is making your score higher. High usage
(balances above 50% of the credit line) are usually considered
negative, because lenders worry that you may be using more
credit than you can reasonably afford to repay. Being "maxed
out" on a credit card (when your balance is close to
or above the assigned limit) is especially negative. The more
accounts in this situation, the more it impacts your score.
Note that in some cases, such as very high credit scores,
as little as 20% usage may have a negative impact, although
minor. On the other hand, low usage is usually considered
positive because it provides lenders with information on how
you use credit, and because it shows that you do not need
to use all of the credit available to you.
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