If Not, Your Credit Will Suffer For 7 Years

Category: Finance, Credit.

Credit scores are the financial measurement to determine your financial creditworthiness. Thus is important to maintain your good credit scores.

Lenders like banks and credit card companies use these credit scores to know your financial ability. Let review the 3 top credit mistakes which you may make and harm your credit scores: Missing Payment. Many lenders will use this piece of information to predict your future miss payment probability and it is important factor to approve or reject any of your loan application. Your credit score is count based on your credit history and how you have managed your current and pass credit obligations. There are three ways that missing payments will hurt your credit scores. But if you do it frequently, it may hurt your credit score seriously. They are: How Frequent are Your Late Payments? - Sometimes you may make your payment late due your busy schedule.

Don& #39. Maintain your good credit behavior with your timely payment. T make the late payment as your habit. How Recent is Your Late Payments? - The scoring model are designed to predict how you are going to pay your bills in the subsequent 24 months. If you have lot of late payment records in your past 2 years, it is predicted that you will likely to miss more payment in the next 2 years. Your recent late payment records especially with the last 2 years weight a lot in your credit scoring. As such, your score will suffer.

The 90 days late payment hurt your credit score more if compare to 14 days late payment. How Severe is Your Late Payments? - The severity of your late payment also plays a big part in your credit scores. If you are too busy to make your payment on time, don& #39. This may happen when you have unbearable debt and you are getting a debt consolidation service to negotiate with your lenders to outcome an agreement to settle your debt with some reduced amount. T late by too late because give a great negative impact on your credit scores. "Settle" with your lenders on your debt Settling your debt with your creditors with less than the amount you owe them will create negative information called" deficiency balance" in your credit report. You may happy that you didn& #39.

However, the lender will report that remaining amount as" deficiency balance" to the credit bureaus as a negative item. T have to pay the full amount. A deficiency balance is considered just as negatively by credit scoring models as any other severe late payments. If not, your credit will suffer for 7 years. In your debt consolidation process, if you can arrange a deal with your lender so that they will NOT report the deficiency balance then that will be your best course of action. Over Utilization of Your Available Credit Card Limits. For example, if you have a Visa card with a credit limit of$ 10, 000 and a$ 5, 000 balance you have a utilization percentage of 50% because you are using 50% of your credit limit.

Your credit scores can be affected with your high balance on your credit card. ." Over utilization is the practice of running up balances too close to your credit card limits. The higher the utilization percentage the fewer points you will earn for your credit scores. Try to best to avoid the above credit mistakes to have a good credit score in your credit report. If paying your cards off every month is unrealistic then try your best to keep that percentage as low as possible to maintain your good credit scores.

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