| Many consumers do not understand the impact | | | | loan request for an automobile. The best way to |
| that debt has on their credit score. Further, they | | | | counter this is to pay off your debts in a timely |
| do not understand the various actions that can | | | | manner. This can be especially true if you want to |
| affect their score. Some of these debt actions | | | | apply for a home loan. |
| may seem innocuous, but can have far reaching | | | | Something that many consumers do not know is |
| repercussions to the unwary consumer. This | | | | that many times a credit score can be affected |
| article will look into a few of the ways that debt | | | | by loan applications themselves. Whenever a |
| and your credit score are linked. | | | | person applies for a loan, and this includes credit |
| The most obvious way that debt and a credit | | | | card applications, that request for credit is logged |
| score are linked is when the consumer fails to | | | | into the credit report. If a lender sees too many |
| make timely payments. As debt mounts, paying | | | | of these applications being generated within a |
| the bills on time can become harder and harder | | | | short period of time, that, too, brings up the red |
| and a few bills may end up being paid late or not | | | | flags. The odd part about this is that the |
| at all. If a bill is over 60 days late, it is likely to be | | | | applications do not need to have been approved in |
| reported to the credit agencies and will, ultimately, | | | | order for this to look bad on your report. The |
| affect your credit score. | | | | simple fact that you submitted the applications (in |
| Another issue with debt and credit score is the | | | | those high numbers) is all that is needed to, |
| level of debt that a consumer has on file. Your | | | | perhaps, have a negative turn on future credit. |
| credit score is based on a many factors and one | | | | The way to counter this is to not submit frivolous |
| of the most important is the debt-to-income ratio. | | | | credit applications, especially those credit card |
| Even if you are paying all of your bills on time, if | | | | applications that swamp most mailboxes, unless |
| the percentage of debt that you have reaches a | | | | you truly need and want that a particular credit |
| certain level as compared to your income, red | | | | line with a particular credit company. Be selective |
| flags go up at the lender's office. In other words, | | | | in your choices and this will all but eliminate this |
| the more money that is required in order to pay | | | | potential problem. |
| your current bills means the less money you will | | | | Lastly, the time to worry about debt and credit |
| have on hand to pay future loan bills should the | | | | score problems is before they become problems. |
| lender approve your loan application for any new | | | | If you see any indication that you are heading for |
| loans. | | | | financial troubles, take action to head it off. Keep |
| The debt-to-income ratio cut off level varies from | | | | in mind that some credit issues can stay on your |
| lender to lender and from loan type to loan type. | | | | credit record for up to seven years, and will lower |
| An application for a home loan would almost | | | | your credit score during that entire time. |
| certainly have a lower ratio cut off number than a | | | | |