Credit > Understanding Your Credit Score (3) Credit scoring is based, partially, on the maturity of the credit lines that are on a consumer's report. Accounts that have been established for years with a good payment history and reasonable use of available credit can stabilize and improve a credit score. However, accounts that are less than a year old, do not have a mature history and may weigh against the score because the consumer's ability to maintain long term stability with their increased spending power has not been established. Derogatory information that is reported on a consumer that has a mature history may not weigh against the credit score as much as derogatory information that is reported on a consumer whose credit history is not mature. Pay off accounts that are public records, "charge-offs" and collection accounts Make arrangements to pay on accounts that have been charged off accounts or placed in collections. Negotiating a settlement (see negotiating a settlement) on collection accounts may be a very effective way of paying balances off at reduced amounts. If you have collection accounts, judgments, or tax liens, you should pay them off as soon as you can, depending on how close you are to having the accounts drop off of your credit report (see guidelines concerning information as reported on your credit report.) Balances on tax liens and judgments are recorded as public record and have been deemed by the courts as legally owed by the debtor. Unsatisfied public records are considered good indicators that a debtor is not financially responsible and will weigh heavily against their credit score. Be sure that no information exceeds the reporting time-frame limitations as set forth by the Fair Credit Reporting Act. |
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