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Value of Credit Report
A lender estimates the level of risk by looking over your record for handling loans and their repayment obligations ,many assessing your credit financial situation . Besides individuals seeking loans , being a good credit risk is highly relevant to corporations and local authorities, and even to nations. Just as individuals with a history of loan defaults are going to be considered high risk borrowers , countries with unstable governments and fragile economies also become known as bad risks and this makes it hard for them to borrow on the international markets.
Credit Score Composition
The first thing the borrower wants to know is that if you paid your past credit amounts on time
Amount Owed: Makes up 30%
Having credit accounts and owing debt does not mean that you are a high risk borrower
Length of Credit History: Makes up 15%
The longer your credit history is, the higher your score will be
Types of Credit in Use: Makes up 10%
They will consider your credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans
New Credit: Makes up 10%
Research shows that opening more credit accounts in a short period of time can represent a greater risk
How long will the information stay on my credit report?
Late payments: seven years
Bankruptcies (completed chapter thirteen): seven years
Bankruptcies (chapter seven): ten years
Foreclosures: seven years
Collections: (usually) seven years (it depends on how old the debt is)
Public record: (usually) seven years (unpaid tax liens can stay for indefinite periods of time)
Now, you're probably wondering how your credit score, credit report, and credit history tie into whether you should take a loan for your car or pay it all off at once.
Well, you wish to buy a house in a couple years, correct? Well, if you do, it would be wiser to get a loan and downpay it. While this will affect your credit score, buying a house should be a higher priority. Its affect won't be too negative, (for your credit score), so it'll be okay. Eventually it will leave your credit history, so you won't have to worry forever.