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Each time your credit file is inquired on, your
credit score drops a few points for a relatively
short amount of time. If you
have too many inquires in too short of a time,
it can dramatically.
lower your short term credit score. If you
have 5 or more inquiries in a 30 day span, it
begins to significantly impact your score. Go
ahead and apply for what you need. The key is
to simply be aware of this, and to avoid
applying recklessly rather than to avoid
applying altogether.
Cable hookups,
department stores, automobile shopping,
apartments, all count as inquiries and can lower
your score. Most Banks will also now check your
credit when you open a new account.
Many, but not
all companies have begun to screen auto dealer
and mortgage inquires out of what they consider
inquiries since they know you are shopping for a
deal rather than trying to debt pyramid.
Time in File
The date your
first “loan” of any kind, including any type of
credit card was established. The older this
date is the better and will lower the affect
current derogatories will have on.
your credit score. The more accounts you have
that you have never been late on, and the longer
you have had them will mean that if you have a
30 day late, it will not affect your score
nearly as much as if your time in file is
short. A 30 day late will lower the score of
an average 25 year old much more than it will
lower the score of the average 45 year old.
In essence, you
have built up a “store” of good credit. It is
imperative if you are young, not to allow
anything to show up as late on your credit.
It will only make it that much harder for you
down the road. A longer time in file will
also lower the affect that charge offs, and
unpaid accounts will have. Instead of having
catastrophic affects on your credit score, it
will be significant.
High Credit
The higher this figure is in your credit file,
the more likely it will be for you to get
approved for a loan request.
Example: If
you are applying for a $20,000 credit card, even
with good credit, good income and a credit score
of over 700, if your credit file’s highest
credit card has a $2,000 limit, it is doubtful
you will be approved for a $20,0000 limit simply
because you do not have comparable credit. The
lender will feel that you have show excellent
responsibility with $2,000, but you have not
shown that you will satisfactorily handle a much
larger loan. If you took out a car loan that
had a much higher balance, it will help, but the
lender may still look to see what is the highest
credit card limit you have and make their
decision about the limit based primarily on
that.
Number of
Tradelines
The number of
Tradelines you have can have either a positive
or negative affect on your credit bureau.
A
trade line is any type of loan, credit card,
line of credit or mortgage that shows up on your
credit file. The more of these that you have
always paid on time on, in general, the stronger
your credit file is and the higher your credit
score will be.
Exceptions to
this are:
Ø
If
you have significant balances on many accounts
Ø
If
you have many credit cards, even without
balances on all. This will drive up your total
unsecured credit available, which the credit
bureaus consider in determining your credit
score.
Ø
If you have opened up a high number of accounts
in the most recent 60 days, a potential lender
reviewing your credit report may be alarmed at
the number of new accounts you have opened and
will be worried that you haven’t had enough time
to show how you will be able to handle the new
accounts. You will be considered a higher
risk.
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