What Do Credit Bureaus Look for (How Do They Rate Credit Scores)

Many of us wonder what credit bureaus look for when rating one’s credit score. It is a simple yet complex rating! A lot of people only know the basics of how a credit bureau rates credit scores and very few know how they actually rate them. Unless you have been in tremendous amounts of debt and have a really low credit score that you are slowly repairing, then you most likely have only a little knowledge on how they rate credit scores.

First and foremost, credit scores are diminished or increased based on a person’s payment history. If a person frequently makes late monthly payments on their bills, then they are most likely to have a lower credit score. But if a person is usually on time with their monthly payments then they are more likely to have a higher credit score than the person that makes those frequent late payments.

Secondly, having a tremendous amounts of debt can have a negative effect on your credit score. So eliminating some of your debt is most definitely a good idea if you are wanting to improve your credit score. But make sure to not close out an unused credit card because it could actually negatively impact your credit score.

Lastly you should only apply and open new credit accounts as needed. Make sure not open too many credit accounts at once because that can hurt your credit as well. You should have credit cards but you should use them and manage them responsibly. Credit bureaus are tricky when it comes to rating your credit score. This is why it is import to understand what they are looking for an be responsible to keep your credit score from plummeting.

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