Question

Why is your amount owed considered when determining your credit score?

Answer 1

Answer:

Owing cash on credit accounts doesn't really mean you're a high-hazard borrower with a low credit Score. Notwithstanding, when a high level of an individual's accessible credit is been utilized, this can show that an individual is overextended, and is bound to make late or missed installments.

The amount owed on different accounts decides 30% of the FICO score. Aside from the general amount owed, the FICO scores think about the amount claimed freely on explicit accounts. On the off chance that you utilize a noteworthy part of the credit you are qualified for, it can negatively affect the FICO scores. Be that as it may, utilizing a less amount from as far as possible allowed can give you a superior score than not utilizing the credit by any stretch of the imagination.  

Answer 2

The correct statement is that when a credit score of a person is determined, the amount such person owes to financial institutions or the lender reflects the score greatly to some extent.

Such credit score is affected by the amount owed, as it explains as to the significant limit utilized for the total limit granted, gives hints for defaults in making early or timely payments.

Credit Score

• Credit score is referred to as a report of the financial credibility of such person in the market, which helps to determine whether a person is eligible for further loans or credits.

• The amount owed to the lender of credit facility is a reflection of what are the chances the person will make timely payments or will not make any defaults in repayments.

• The higher the credit limit utilized, the higher will be the negative impact on the credit score of such person.

Hence, correct statement is that when a credit score of a person is determined, the amount such person owes to financial institutions or the lender reflects the score greatly to some extent.

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