Specific Factors that Make Up Your Personal Credit Rating

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Your personal credit rating is a number that basically signifies how trustworthy you are when it comes to paying off your debts. The ratings range from R1, which is perfect credit, all the way to R9, which indicates bankruptcy or debts which are considered uncollectible. Most people are aware that your ability to get car loans, credit cards and other forms of credit, depends on this credit rating to a large degree.

If you’ve ever been denied on the basis of credit rating, you know just how frustrating and potentially embarrassing it is. Here are some of the specific factors that make up your credit rating, so you know which areas to focus on.

Do You Have Outstanding Balances?

Even if you feel like the situation is under control because you always make your minimum payments on time, having a bunch of open accounts with outstanding balances won’t help your credit rating. Yes, paying your bills on time is good and it does show you’re responsible, but if you have thousands or tens of thousands of dollars out there that is still owed, a new creditor may not feel comfortable lending you money.

What’s Your History Like?

The way you borrow money and pay money back is detailed and available for prospective creditors to see when they are checking you out. They will get a sense of whether or not you’re reliable and trustworthy, and they will form opinions and perceptions from this information, even if it’s not 100% accurate.

They don’t have much else to go by, so keep your history in mind when you take out credit and when it is time to make your payments. A poor credit history can follow you around, but so can no credit history at all. Sometimes, having no history is worse than having a poor one.

Number of Inquiries

Every time you apply for a credit card or line of credit or loan, a lender will contact one of the main credit bureaus to find out what kind of credit rating you have. If you have a high number of inquiries attached to your name, some lenders will see it as a red flag, so try to keep them to a minimum.

Have You Been Bankrupt?

Obviously, your credit rating is going to take a big hit if you have to file for bankruptcy. Your unsecured debt will be gone, but the fact that you filed will show up on your credit report well into the future. Having unpaid accounts referred to collections departments is another thing that will tarnish your credit rating.

It’s easy to see that using credit responsibly and paying bills on time is the ideal way to maintain a positive credit rating. Make this your ultimate goal, and if you find yourself getting into trouble, give us a call for some expert help to get you back on track.

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