Having been widely approved as the most prevalent method of determining a client's credit worthiness, the credit score is a very important integral part of most business transactions especially in situations that may demand for advance payments for goods or services or even in the case of consumer expenditure. The credit score points typically range from 300 to 850. Among the items that constitute your credit score are; payment history constitutes 35%, the debt level catering for 30%, Length of credit history at 15%, the inquiries at 10% and finally the mix of credit making the remaining 10%.
From the above listed breakdown, it is quite clear that a credit score take an overview of various aspects concerning your borrowing and repayment pattern over a long period of time. As stated, the credit score points will range from 300 to850with ach of the above sections contributing towards the score in the ratios given. According to most financial institutions, any score above 700 is usually considered good although the scores requirements for different institutions may vary slightly. The reason behind the above mix of factors that constitute your credit score is to enable whoever may be interested in knowing your credit worthiness to have a clear preview of your behavior towards previous credits advanced as this should give them a clear picture of what to expect in as far as dealing with you on credit matters may be concerned.
Of the above factors, payment history happens to constitute 35% of all the underlying factors behind your credit score. This is because potential lenders are all keenly interested in getting an insight into your attitude towards debt repayment. In this line they will make inquiries over seemingly simple but trivial issue such as how late you pay your simple bills such as electricity, water among other domestic consumption bills.
Persistent records of late payments of any bill regardless of how little it is May damage your credit score. It is in this light that you should pay keen attention to detail eve if the debt is over a 410prchase. Paying it promptly won't do you the harm you may be exposed to if you delayed to pay it simply because it was too small and inconsequential to both yourself and the credit company. The bottom line here is that the system will register it as an unpaid debt. Since the exact amount will not be stated on your credit score report, It will therefore be difficult to convince any potential lender that it was a negligible $10 debt and the damage may prove too costly.