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Factors That Affect Your Credit Score

Open or Active Accounts:

It is important to remember that on-time monthly payments with your creditors are ideal. Your credit score will increase, while your debt versus your income ratio decreases. Not only is a positive payment history important, but a balance on revolving accounts is important too. A revolving account is an account that charges you interest on a month-to-month basis. This is usually a credit card.

Here are important factors to remember:

A Revolving Account is an account that charges you interest on a month-to-month basis. Keep the balances below fifty percent of the high credit limit. For example, if the high credit limit is $1,000.00 dollars then your balance should be below $500.00 dollars. A balance over fifty percent of the limit will start to decrease your credit score monthly. Credit is there to help you not hurt you. Only accept credit offers for one main purpose to increase your credit score for more lending opportunities.

Factors That Affect Your Credit Score

Collection Accounts:

Collection Accounts are thirty five percent of a consumers credit score. The type of debts that a consumer will see in this section is accounts that are “closed accounts”, due to non-payments. These debts are usually sold to third party collection agencies, or transferred to the collection department within the creditors facility.

Once a debt is reporting with the bureaus as a collection, the consumers credit score starts to decrease on a monthly basis. Remember, every thirty days your score will either increase or decrease. This will affect your credit for the first two years from the date it was filed. The truth to this matter is that a consumers credit score starts to decrease once a payment is either not made, or late with an active or open account. At this point a consumer will get notices in the mail from their creditors stating that these accounts are past due, and try to negotiate a payment plan.

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