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This Holiday Season, Watch Your Spending and Your Score
Released October 2004
Findings:
- 55% of U.S. consumers have now found themselves with a delinquency on their credit report, and one out of three consumers has had a delinquency in the last year.
- The Experian National Score Index (ENSI) study found the U.S. consumer's average PLUS Score to be 629 when five or more inquiries were made within six months.
- The ENSI study found that approximately 25% of U.S. consumers opened at least one new account within the last six months.
- The ENSI study found the most dramatic range in PLUS Scores for this category. A delinquency within the last year affected 34% of U.S. consumers, with their PLUS Score at an average of 598.
- Approximately 9% of U.S. consumers have at least one public record on their credit report, and shows an average PLUS Score of 585.
The affect of debt on consumer credit:
Caution: The holiday season is closer than it appears. When shopping becomes America's favorite winter sport, it can be easy to overspend and accrue debt. And when bills spiral out of control, it can be difficult to meet your financial obligations. Any late or missing payments can have a damaging effect on your credit score. 55% of U.S. consumers have now found themselves with a delinquency on their credit report, and one out of three consumers has had a delinquency in the last year.
One of the best ways to look after your credit score is to review your credit report on a regular basis to make sure the information is accurate. Possible inaccuracies on your credit report not only skew your credit worthiness, possibly preventing you from getting the best loan rates and terms, it can also be an indicator of potential Identity Theft. The fastest growing crime in America can easily damage your credit, name, and reputation if left undetected.
Here are some key items you may want to keep in mind when you are reviewing your credit report, as these areas can affect your credit score:
New Inquiries
When your credit file is checked, an inquiry is placed on your credit report. One type of inquiry is called a hard inquiry, which appears on your credit report when your credit is reviewed by potential creditors with which you have applied for credit. The other is called a soft inquiry, which does not appear to creditors and does not affect your score. These include inquiries made by prospective employers, pre-selected credit offers, account reviews from existing lenders, and personal inquiries.
Inquiries can add up, and excessive hard inquiries within a short period can be interpreted negatively by creditors. Inquiries stay on your credit report for two years before cycling off your report. The Experian National Score Index (ENSI) study found the U.S. consumer's average PLUS Score to be 629 when five or more inquiries were made within six months.
New Accounts
Your credit report will contain detail on credit accounts opened or closed in your name, including accounts you are authorized to use. It may also include real estate accounts, revolving accounts (such as credit cards), installment accounts (such as auto loans), collection accounts, and other accounts. The ENSI study found that approximately 25% of U.S. consumers opened at least one new account within the last six months.
For revolving accounts, score calculations generally look at the utilization of accounts more than the actual credit limits or balances. Credit card utilization is based upon the total balance amount as it relates to the total credit limit, or balance-to-limit ratio. High utilization of credit cards can have a negative effect on credit scores.
Delinquencies
One of the best ways to maintain good credit is to pay bills consistently and on time. As a matter of fact, delinquencies are the most frequent negative score factor for U.S. consumers. The ENSI study found the most dramatic range in PLUS Scores for this category. A delinquency within the last year affected 34% of U.S. consumers, with their PLUS Score at an average of 598.
New Public Records
Public record information comes from federal district bankruptcy records, state and county court records, tax liens and monetary judgments, and in some states, overdue child support records. Most public records remain on your credit report for seven to ten years. Approximately 9% of U.S. consumers have at least one public record on their credit report, and shows an average PLUS Score of 585.
By monitoring your credit regularly, you can stay on top of critical changes to your credit report that in turn can impact your credit score. Take command of your credit when you practice responsible credit management this holiday season.
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