There are a number of credit score risk factors that lenders consider when reviewing an application for a loan or credit card product. Those with certain red flags in their credit may be paying their bills on time but still could be considered a bankruptcy risk. There are several ways to avoid being labeled a credit risk besides paying bills on time.
New Credit
Having a lot of new credit accounts is a credit score risk factor, because it indicates you might be in financial trouble.
Inquiries
Every time you apply for credit, a notation called an inquiry is placed on your credit file. Having a lot of inquiries is considered a risk factor, because seeking a lot of new credit could also mean you are in financial trouble.
High Balances
Having high balances on existing credit, even if the bills are paid on time, is an additional red flag lenders look for when evaluating applications. High credit balances could mean you are placing too much financial dependence on credit and have inadequate cash resources to keep your account balances lower.
Minimum Payments
Some lenders look closely at a credit file to see if you are making only minimum payments on your credit card accounts. When only the minimum payments are made, this is another sign of possible bankruptcy ahead.
Address Changes
Lenders like to see a stable address history, because this usually means the borrower has a solid lifestyle and is at lower risk of bankruptcy. A lot of address changes on a credit file is usually considered a credit score risk factor.
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