Chapter 2 Conclusion
Your credit score reflects how reliably you’ve paid your bills in recent
years. It indicates how much interest you’ll pay on loans and financing.
A low credit score can means hundreds of dollars a month in higher interest
rates.
This is the purpose of credit scores. If you have a history of paying late,
you pay more.
How long your past experiences affect your score varies. In general:
- missed payments remain on your report for seven years;
- most public record information remains on your report for seven years;
- Chapter 7, 11 and 12 bankruptcies remain on your report for 10 years;
and
- unpaid tax liens remain on your report for 15 years.
Lenders don’t like to see too much debt on your credit report. Having
too many credit cards with high balances makes you a less appealing risk.
So does having a lot of credit cards with high credit limits, even if you
haven’t run up big balances.
We’ll consider all of these issues in greater detail later in this
book. In this chapter, we’ve just focused on the mechanics of credit
scores.
Next: Chapter
3 - How Credit Cards Work |
