Decipher Your Credit Score and Avoid Deteriorating Your Credit Record
A credit score ranges from 300 to 900 points and is impacted by the ratings issued by your creditors. Clients who make their payments within 30 days of payment due date is classified as R1, which is excellent. Clients who make their payments in more than 30 days of payment due date are classified R2, and their rating changes with each 30 day segment. R5 is an account that is at least 120 days overdue while R7 means that the account has been paid further to a debt consolidation in Court or other similar arrangement. Finally, R8 is repossession and R9 is bad debt, placed in collection, absence of an address to find the person or bankruptcy. The higher the credit score, the higher the quality of your credit.
Apply the following guidelines so as not to deteriorate your credit score:
1 – Whenever possible, avoid any delay in payment of any kind. It should be noted that the longer the payment is overdue, the closer the credit rating issued by a creditor will be to R9, and thus the more impact it will have on your credit score. Late payments leave a trail in a credit record for at least six (6) years.
2 – Using on average more than 50% of your credit has a negative impact on your credit score.
3 – It is better to have only a few bank accounts and to keep them for a long time. Changing bank accounts frequently will definitely have a negative impact on the credibility of the applicant.
4 – Also, looking for credit increases the risk of indebtedness, and will have an impact on the risk perception of a potential lender. In fact, the number of institutions asking about your credit report further to a loan application will have a negative impact on your credit.
5 – Having many creditors increases the lender’s risk perception. It gives the impression of instability. It would therefore be preferable to avoid opening different accounts, especially if it is the same type of credit. However, it is better to have diversity in the types of credit used.
Thanks to these guidelines, you will be well equipped to keep the highest possible credit score.