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What criteria do credit companies use to rate credit worthiness

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If you are interested in getting some kind of credit from a company, it is most likely that you will go under some kind of credit evaluation.There are a lot of different things that can be considered during the credit evaluation process.You will want to be aware of these criteria to help you get a better idea of if you have a good chance of obtaining credit.Here are some of the criteria that credit companies use to rate credit worthiness:

  • Types of credit in use:One thing that credit companies look at is the types of credit that you already have in use.They will want to try and get a sense of how much debt you are involved in, particularly so they will be able to determine if you will be able to pay off your credit debts with their company.In addition, credit companies will also be able to tell what types of organizations have already agreed to give you credit, which also can be an indication of how good your credit is.
  • - Length of credit history:Credit companies also are interested in finding out the length of your credit history in order to rate your credit worthiness.For example, if you have really only built up credit history for the past three months, your record will not be as impressive, even if you have kept up on your payments during the time.However, if you have a credit history which has spanned over several years, this can show credit companies that you have been able to stay in good credit for a long period of time.
  • - Bankruptcy:Another thing that credit companies look at when rating credit worthiness is if you have ever filed for bankruptcy.Sometimes it can be very difficult to get a good credit rating if you have ever experienced bankruptcy (or several bankruptcies) in your life.However, don't get discouraged if you once had financial problems and filed for bankruptcy - there are credit companies which are willing to help you and work through these credit issues, so that you can get back on your feet again!
  • - Late payments:Late payments are also a good indicator to credit companies of a person's credit worthiness.Credit companies are very interested in knowing how soon the credit and debt will be paid off.If you are good at making payment on your credit bill, then you should not have a lot of problems.However, if you have a lot of late payments on your credit bills, then you might have a harder chance receiving other types of credit or loans.
  • - Outstanding debt:Just like how credit companies are interested in the types of credit that you have in use, they also are interested in any outstanding debt that you might have.This can extend to mortgages, business loans, school loans, car loans, and any other type of debt that you might have.The amount of debt that you have will let credit companies have an idea of how easy it will be for you to pay off your credit will them.
  • - New applications for credit:Finally, credit companies are also interested in seeing what new applications for credit you have applied for.Are you applying for credit in several organizations, and not merely with their company?The amount of new credit that you apply for also can determine whether a credit card company decides to approve your application or not.The best thing to do in this case is to not apply for a whole bunch of credit at the same time!

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