Nearly all of us have heard the term credit score. This
magical number that seems to hold control over most of our
financial decisions. The credit score will decide whether
or not you get financing on a home, car or other types of
loans. They influence the amount of interest paid and even
insurance rates.
Some are even claiming that those with low credit scores
can have difficulty finding employment in certain sectors.
The credit score is vitally important and keeping it as
high as possible can make a big difference in one's
financial life.
There are several features the influence a credit score.
One of the most important factors is past payment history.
Paying your bills on time is important because it helps you
to establish a good track record. It also shows that you
are a reliable person when it comes to meeting your
financial obligations.
Payment history makes up about 35% of the total credit
score. If you always pay your bills on time then this part
of your credit score is sound. However, if you don't then
credit companies will start to ask other questions.
For instance if you have a few late payments that are few
and far between, then this will not effect your overall
score much. However, if this is a frequent occurrence then
things change. They will look at how often you make late
payments and how late the are. A payment that is a few days
late does not carry as much weight as those that are
several months late.
They will also look at all of your accounts. If you have
several and only one shows a few late payments, then again
it isn't going to do a world of damage. However, if several
accounts show frequent late payments then the story changes.
Your credit scores can be highly influenced is any of your
credit accounts have been turned over to collections. If
you owe money on an account, and make no payments in a
certain amount of time, (usually 90-120 days) the company
can turn the account over to a collections agency. Your
credit score is automatically lowered and will remain there
until this account is cleared.
Finally, bankruptcy can have a detrimental effect on your
credit score. It will depend on the type of bankruptcy you
declare but generally those that have been though this
process are barred from getting further credit for several
years.
Several factors influence your credit score. Payment
history is one of the major components. By maintaining a
good payment history and keeping up with all of your
commitments, you will give yourself the best chance of
keeping that higher credit score.
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Jim Moore comes from a background in engineering and
financial services software. Jim has spent the last 20
years as a professional writer working for some of the
world's largest engineering and financial companies.
http://www.improveyourcreditscoring.com
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