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WHAT IS A CREDIT SCORE?
If you're like most people you understand the basics of how credit scores are developed. Paying your bills, including mortgage payments, auto loan payments, credit card payments, and loan payments on time helps you to establish good credit. However, understanding what causes bad credit is a bit more challenging. Your overall credit score is based on a number of factors, including how many credit accounts you have open, how long you've had credit, what types of credit you've used, the debt to available credit you have, revolving credit, and many more items. While it is not imperative that you understand exactly how each of these factors affects your credit, it is important that you understand that paying bills on time, keeping the amount of money you owe to a manageable level, and making sure that you regularly check your credit, is vital to achieving and maintaining a good credit score.
WHY GOOD CREDIT MATTERS?
Lenders use your credit report in order to judge your reliability as a loan candidate. Your credit report demonstrates your ability to handle debt responsibly and will help banks decide if you are a desirable loan customer. A high credit score can help you lock in low-interest rates or secure special deals on loans. A low credit score, on the other hand, may prevent you from securing loans thus compromising your ability to buy a car, open a credit card, rent or buy a home. A history of inability to manage your credit successfully will make lenders uncomfortable about trusting you with additional funds in the future. If they do lend you additional funds in the future, you will almost certainly pay a higher interest rate than a borrower with good credit.
WHAT MAKES UP A CREDIT SCORE?
Thirty-five percent of your credit score is made up by your payment history. This includes late payments, collections, bankruptcies and tax liens. Each type of account will stay on your credit report a specified period of time and each type of derogatory will hurt your score differently. Cleanup Credit Repair works to remove accounts that are reporting negative, closed, derogatory, or delinquent on your credit files.