Explain credit and the problems it causes?
Answers:
Credit is a reflection of your personal debt and how you have managed it over the years.
Your score is made up of the following;
1. Payment history 35%
2. Time in bureau 15%
3. Types of credit used 10%
4. New credit 10%
5. Credit to debt ratio 30%
As you can see 1,2& 5 are the most important as far as score goes, but score is not everything you need a great score and profile.
To achive this you need 3 revolving accounts (credit cards) and 2 installment accounts (homes, cars, boats, furnature or personal laons) all with good long pay history's.
Keep your credit card balances below 30% of your limit every month and pay before the due date. This avoides interest charges and shows that you can manage your money.
As far as problems, there are none unless you don't pay your bills as agreed.
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