What is Factored Into My Credit Rating?

As many people already know, your ability to get loans and other forms of credit has a lot to do with the information contained in your credit report.  Even with bad credit loans, a credit rating that has a bad history will usually result in the denial of your credit request.

No one starts out with the thought of ruining their own credit rating, but sometimes things happen and that’s just a fact of life.  In many cases, people don’t even know which factors are important, and may be causing damage to their credit without even knowing it.  Here are some factors to keep in mind.

Your History
Your overall credit history is one of the primary factors that lenders look at to determine whether to lend you money or not.  Basically, your history tells them if you are reliable when it comes to paying back money that you’ve borrowed.  Anytime you take out a loan or get a credit card, you are establishing a credit history.

If you’re thinking that you’d be better off to avoid getting credit like this, think again.  Having no credit history is probably worse than having a mediocre history.  In fact, if you have no history, it’s advisable to get an unsecured personal loan, use it for some of your everyday purchases and then pay them off with the cash you would have used.  That way, it shows you’re reliable and boosts your credit rating.

The number of times companies, banks and other organizations have recently asked credit bureaus about your credit rating will have an effect on it.  This gives the impression you’ve been trying to obtain credit from multiple sources and may raise a red flag to potential lenders.

Outstanding Balances
As one might expect, the amount of your outstanding credit balances is an important factor in your overall rating.  Having several open accounts with hefty balances isn’t going to reflect favorably on your situation.

Bankruptcy History
If you have ever declared bankruptcy, your credit rating will certainly take a major hit.  No one ever declares bankruptcy unless they have gotten themselves into a very serious financial predicament. Bankruptcy removes all of your unsecured debt, but it can show up on your report for creditors to see for years into the future.

Collection History
If you have ever had an unpaid bill or debt that was referred to a collections agency, that will also factor into your credit rating.  It is important to always make your payments on time, and to never leave an unpaid bill or debt unpaid.

As you can see, there are many different factors that go into your credit rating, and some are pretty surprising.  That’s why it’s important to make your payments and control your debts.  If you’re already on the wrong side of the equation, look into bad credit loans to help get back where you want to be.