The impact that credit rating factors can have on evaluation of credit worthiness is relative to the time frame during which they are reported and the relative “maturity” of the consumer’s credit history. If derogatory information has been reported to a credit bureau in the recent past, it will most likely weigh heavier against a consumer’s credit worthiness than information that was reported a relatively longer time ago. Generally speaking, creditors are more concerned about information in the near past because it is more indicative of the consumer’s present financial circumstances. That is not to say, however, that older derogatory information may not affect the outcome of a loan application or the interest or payment terms that are offered on a loan or credit card.

If derogatory information is reported on a consumer who has a “mature,” long standing, and otherwise positive credit history, the information will not affect the consumer’s credit worthiness or score as much as it would an individual who has a relatively “immature,” short, and less comprehensive history. A “mature” history is not only determined by length or account history, it is also determined by the kind of credit that the consumer uses. In other words, positive or negative information concerning a major credit card account (Visa, MasterCard, Discover, or American Express) or installment loan may weigh heavier than information that is reported on a merchant, department store or gas card. Finance company accounts may weigh heavier against a credit score, especially if they were established in the recent past.

Finance company loans are regarded as riskier loans that consumers turn to when they run out of conventional options. They are relatively easy to acquire and often require payment of very high interest that drives monthly payments higher. The higher payments can contribute to financial mismanagement and over-extension on credit obligations.

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