Wednesday, July 28, 2010

What is a credit rating and credit rating after bankruptcy

As I remember sitting in my high school government and civic class on how to be a good citizen I don't recall learning about credit scores. In fact they didn't teach it in law school either. These days though you are well served knowing a little bit about credit scores.

What's in a credit  score?
35 percent Payment History: "Having a long history making of payments on time and no missed payments on all credit accounts is one of the most important items lenders look for." 

·         30 percent Amount Owed: "This measures the amount you owe relative to the total amount of credit available. Someone   closer to maxing out all their credit limits is deemed to be a higher risk of late payments in the future and this can lower their credit score."
·         15 percent Length of Credit History: "In general, a credit report containing a list of accounts opened for a long time will help your credit score. The score considers your oldest account and the average age of all accounts."
·         10 percent New Credit: "Opening several new credit accounts in a short period of time can lower your credit score. Also multiple credit report inquiries can represent a greater risk, but this does NOT include any requests made by you, an employer or by a lender who does so when sending you an unsolicited, "pre-approved" credit offer. Also, to compensate for rate shopping, the score counts multiple inquiries in any 14-day period as just one inquiry."
·         10 percent Types of Credit in Use: "Your mix of credit cards, retail accounts, finance company loans and mortgage loans is considered."

One of the main questions I'm asked is, what happens to my credit score after bankruptcy? I've enclosed one of my videos to give you a quick overview. If you're considering bankruptcy take a look at it. 

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