Good Credit Report

What Makes a Good Credit Report?

In general, the following factors make for a good credit report:

• no more than eleven accounts, open or closed, on the report;
• no more than one change of address on the report;
• steady employment;
• regular payments;
• no overdue payments,
• no defaults,
• no foreclosure,
• no late fees;
• low balances; and,
• a credit score of at least 680.

Sometimes special offers lower your credit score...

Sometimes what save you money can look bad on a credit report. Examples are:

• Opening accounts to get special offers (for example, 15% off your purchases with a new account) and then closing them after paying the balance. While this is a deal, it increases the number of accounts on your credit report and in fact looks bad for the consumer.

   

• Applying for credit you probably do not need and will not use, just so you can have it as an emergency line of credit. This simply adds to your available credit and may make it difficult for you to get other credit you genuinely need.

   

• Using a credit card for a lot of purchases to take advantage of convenience and the thirty day grace period and then paying off the balance each month. While this offers convenience and does not cost you any interest, future creditors who get your report will only see the current balance on the account and will not realize you pay it off each month. This will appear as a large balance.

   

• Consolidating student loans. While this may get you a better interest rate and offer the convenience of one payment per month, it increases the number of accounts on your report. The more accounts you have, the lower your credit score.

Taking special offers, paying your balance in full every month, and consolidating loans have advantages that more often outweigh the disadvantages. However, you should be aware of the effect they have on your credit report and credit score.