Credit Card Debt and How it Affects Your Credit Score
The Professionals at Credithelpfinancial would like our customers to know that:
Your obligations to credit-card companies carry more weight on your credit report than bigger debts, such as home and student loans. This is consumer credit information that is used to calculate credit scores. To come up with scores, the companies use information from thousands of different sources. Taken together, the score allows lenders to assess a consumers likelihood of paying back a loan, whether to offer a loan, and to calculate loan amounts and interest rates. Besides mortgage, auto, and educational loans, credit scores may also be a determining factor in apartment rentals and in hiring decisions.
Credit-card companies supply a lot of the information that goes into your credit report; Fifty-eight percent of the pieces of information contained in the fine print of the average credit report are furnished by credit-card issuers. Thirteen percent are supplied by debt-collection agencies. Seven percent come from education lenders, another seven from mortgage lenders, and the remaining lines are provided by creditors that make auto loans.
When the companies calculate a credit score, being behind on a single mortgage payment counts against a consumer slightly more than being behind on a single credit card, so:
If you have a credit score of 760, being 60 days late on a credit-card payment will cause you to lose 70-90 points, the same amount as being behind on a mortgage or car payment. If you have a high credit score of 900, being behind on a mortgage is going to hurt your score slightly more (100-120 points for the mortgage vs. 85-105 for the card).
Although Banks today do look at applications on a case be case basis to determine interest rates and terms.
But since each late card payment counts against you separately, and people tend to have multiple cards, the cards often carry more weight. In other words, being behind on your credit-card payments matters more to your credit score than your consistency in repaying bigger debts, such as home and student loans. Regardless of the type of accounts multiple delinquencies are always more severe than a single delinquency... The impact from becoming delinquent on three bank card accounts would be similar to going delinquent on a mortgage, auto, and credit-card account at the same time.