What affects a credit score?

A credit score is a three-digit number used by financial institutions to evaluate creditworthiness. When an individual applies for credit cards, mortgages, student loans, an auto loan or other credit line, the lender pulls a credit score to assist in the evaluation process.

Key Factors in the Process:

  1. Open Credit Cards – How many, how much credit available, balances, payment history and Utilization Rate.
  2. Number of Accounts – The number of accounts can affect your credit score. This will be reviewed in detail during the first semester of this course.
  3. Hard Credit Inquiries – Hard inquiries are recorded when financial institutions (lender or credit card issuer) check credit for decision-making purposes. Multiple hard inquiries generally will more significantly impact credit and show some desperation for credit.
  4. On-Time Payment Rate – Do you pay on-time? On-time payment % percentage or Ratio.
  5. Derogatory Marks – Poor marks from collection accounts, liens, foreclosures and bankruptcies.
  6. Age of Open Lines – Average age of credit lines is a factor.

Learn more at www.kreditkoncepts.com

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