What Creditors Look For

When evaluating credit, creditors see the type and amount of debt an individual have and the rate of credit utilization. For rotating accounts, the rate of credit usage is measured as the proportionality of available credit in use. For installment and mortgage accounts, credit use is generally measured as the proportionality of the original loan amount that is unpaid. High rates of credit use are generally viewed as an further hazard factor in credit evaluations, as they may bespeak that an individual have tapped all available credit to cover with a financial setback, such as a loss of income.

Credit evaluators see the length of a person's credit history because it supplies information about how long the individual have been involved in credit marketplaces and about whether he or she have obtained credit recently. The age of the account is relevant to an evaluation of credit quality because the longer the account have been open, the more than information it imparts about an individual's willingness and ability to do payments as scheduled. New accounts may impart little information other than that a consumer have had a recent demand for additional credit and have been approved for credit.