These factors lower my credit score, but I don’t understand it?

Deal Score0

You opened 100% of your revolving accounts in the past 12 months.

This lowers your score. Having accounts listed in your credit reports is a positive factor because the payment history of these accounts shows lenders how well you pay your bills. Therefore, having too few accounts or too few open accounts may be considered negative. However, having too many accounts or adding new accounts too quickly may also be considered negative because lenders worry that you are spending (or preparing to spend) beyond your means, even if you have never been late with any payments. Note that closing accounts will not change this. Also, if you do not currently have credit, getting your first few credit cards may be difficult and may involve high fees, high interest rates, and low credit limits. Note that accounts from personal finance companies (which specialize in lending to people with credit problems) may be considered negative.
You owe debt on 100% of your revolving accounts.

This lowers your score. High balances are a negative factor because lenders worry that you are living beyond your means and may not be able to repay them. This is particularly true for credit cards. For installment loans such as mortgages and auto loans, lenders often use the proportion of the loan that is still unpaid to judge your ability to take on new debt. If very little of your installment loan balances have been repaid, lenders may not give you more credit that could add to your debt. In general, lenders evaluate how much you owe (your debt) in relation to how much you earn (your income). However, no matter how high your income, having a lot of debt may lower your credit scores because lenders know that adverse changes in your employment and life events such as divorce or illness may make it hard to pay your bills. Low balances, on the other hand, are a positive factor because lenders do not stand to lose as much if you become
unable to repay them. However, not using your credit accounts may be considered a negative factor, because it does not provide lenders with information about how you typically use credit and repay your debts.

I dont understand, I’ve never been late with one payment, and yet they say I’m in debt. So here are my questions:
– What is revolving account?
– How do I remedy these problems?
– Can someone translate these things in simple English?

Thx a ton!

3 Comments
  1. Reply
    OC1999
    July 17, 2011 at 8:06 pm

    In simple terms a revolving account is a credit card. As for what you can do, really the only thing that will help you is time.

    Your history is built on how you manage your credit over time. So the longer your positive history the better your score. Since you opened all of your accounts in the last 12 months you have a short history, and that is considered a negative.

    How to help your score is to use your credit cards wisely by never going over 30% of your credit limits, that is if you have a $ 1000 limit never spend more than $ 300. Then pay your bills on-time every month. To avoid the interest you should pay them off every month. If you do not pay them off then pay as much as you can, but ALWAYS pay more than the minimum.

  2. Reply
    EMT13
    July 17, 2011 at 8:18 pm

    If you owe anyone (credit cards, installment loan) then yes you are in debt. Simply pay credit cards in full every month to help your score. If you can’t pay in full right now then do everything you can to get your total balances of your credit cards BELOW 30% utilization. So if you have a card with a credit limit of $ 100 then you need to keep the balance below $ 30 with $ 0 being the best to best help your score.
    Revolving credit is credit cards whereas installment would be loans for such things as cars. Your credit score will be higher with a balance of both types of credit because it would show how responsible you are paying monthly payments on time every time.
    The age of your accounts come into play when determining your score also. The longer you have an account open and in good standing the better and more responsible you look when it comes to using credit. Paying extra on monthly payments will get your debt down faster and again will increase your score.

  3. Reply
    bizadvisor
    July 17, 2011 at 9:13 pm

    Revolving Credit= credit which becomes available once paid off eg credit card;
    If you have new credit and have used upto maximum then basically what it means is that you are spending more than you are earning hence a credit risk for the bank. The key to good credit is to be able to pay off most of your credit every month. If possible take some professional advice, consolidate your credit and make an effort to pay it off as quickly as possible while keeping your spending habits in check.

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