We continue to work our way through the five factors that impact your credit score. This week’s suggestions are all related to your amounts owed. Amounts owed account for 30% of your credit score.
Owing money on credit accounts doesn’t necessarily mean you’re a high-risk borrower with a low credit score. If a high percentage of a person’s available credit has been used it may indicate that a person is overextended, and is more likely to make late or missed payments.
There are six components to this section. We’ll discuss two this week and four next week.
Amount owed on all accounts: Even if you pay off credit card balances each month your credit report may show a balance on those cards. The total balance shown on your last statement is generally the amount that will show on your credit report.
Amount owed on different types of accounts: In addition to the overall amount you owe, your credit score considers the amount you owe on specific types of accounts, such as credit cards and installment loans.
Click here to read Bill Holmes’s first blog post in this six part series.