Your credit report is made up of many things related to your personal finances and credit use. Each item can have a positive or negative effect depending on whether it shows responsible credit use and how it meshes with the other items. These things will affect your credit report, normally for seven to 10 years. Your credit rating will continuously change based on the most current items.
Payments on Loans and Credit Cards
Your payments for each account are listed on your credit report. They can affect it positively if you always make them on time or hurt it if they are delinquent or if you skip some payments altogether.
Opening New Credit Card Accounts
Your credit report is affected when you open a new credit card account. It usually brings your credit score down by a few points, MSN Money financial columnist Liz Pulliam Weston explains. Lenders look at how much credit you have available and get nervous if you have too much as compared to your other obligations. A new credit card increases the available amount.
Available Credit
Your credit limits affect your credit report because they show lenders how much room you have to run up more debt. Control this by turning down automatic credit limit increases offered by your card issuers.
Transferring Balances
You may wish to transfer a balance from a high interest credit card to a low one, and this can affect your credit report. Pulliam Weston says it affects the credit utilization ratio used by Fair Isaac Corp. to calculate credit scores. A transfer will usually bring down your score because of the way it affects the calculation.
Closing Credit Cards
It can look bad on your credit report to close credit card accounts because this shortens the length of your history, according to the FICO credit score company. Keeping them open and only using them two or three times a year for small purchases has a better effect.
Account Mix
Your credit report shows all the different accounts you have open. A good mix of installment loans and revolving accounts has a positive effect on your report.
Repossessions
A repossessed vehicle hurts your credit report, creditreport.com explains, because it shows that you could not make your car payments, resulting in the lender taking your car. It will show up on your report for seven years.
Foreclosures
A foreclosure has a serious effect on your credit report, according to creditreport.com, because it means the bank took your house because you were unable to handle your mortgage payments. It stays on your report for a full seven years.
Bankruptcy
Bankruptcy hurts your credit report and generally remains listed on it for seven to 10, depending on your particular case. Its effect lessens over the years, FICO credit states.
Paying Off Old Debts
Your credit report can be affected by paying off old debts. Ironically, this usually has a negative impact unless you negotiate with the creditor on the way it is reported to the credit bureau. An item that shows as a paid charge off is negative, but some creditors will agree to report it as "paid as agreed" in exchange for your pay-off.
0 comments:
Post a Comment