How The Credit System Works (under construction)
–Click on the headers below to learn more in depth of what each one of these are and how to fix\avoid problems that could potentially arise–
Hard Inquires :
Hard inquires from applications for a simple low interest financing for a small purchase like a T.V to a larger purchase like a new home. These inquires can stay visible on your credit report for up to 2 years and slowly decrease over time.
Age of Credit History :
Lenders are looking for experience using credit cards or payment accounts like loans. This is comparable to a job application. (would you want someone who is not as knowledgeable at the job at hand, or someone who has the years of experience in the particular job that can be ‘trusted’ to do said job they were applying for?)
Credit Card Utilization :
Having only one credit card and higher charges on that card because you don’t want to juggle more than one credit account is doing more harm than good in terms of achieving that perfect score. Having multiple cards with high credit lines helps with utilizing your credit card responsibly.
Total Accounts :
Lenders like to see that you have used a variety of accounts responsibly and have not had any slip-ups with payments on them.
Derogatory Marks :
These can be the ultimate weight on your shoulder if you can’t stay on track with payments or utilizing your finances responsibly. These marks stay on your credit report anywhere between 7-10 years !! Coming back from a minor mistake like this can be struggling for years to come if you don’t stay on top of everything you have acquired.
Payment History :
This is self explanatory, but if you have 100% on time payments, lenders are more willing to give you a loan because you can be trusted to pay it back on time. This is also crucial and can impact your score greatly.