You better have a solid understanding of the “Amounts Owed” section of your credit score as it consists of a crazy 30% of your entire score. That means this section weighs almost as much as all you positive payment history and all your derogatory accounts, such as collections, charge offs, tax liens, late payments, bankruptcies, judgments, and so on (other than inquiries) combined. Don’t get confused on the name either, “Amounts Owed,” is very unclear and is usually interpreted incorrectly.

I’m not giving the keys to kingdom away just yet. Instead you get a tremendous example, and a test to best explain it. Let’s say we have Jim who has an immaculate credit report other than having Macy’s charge off which is still maxed out. Then we have Sally who has an identical report but with an unpaid tax lien. To give you only a 33% guess rate we also have Fred again with the same report but has an unpaid utility collection. All three accounts have the same age; the question is which one negatively weighs more?

The meat and potatoes of “Amounts Owed” is related to revolving accounts. This section likes you to have them but penalizes you if you are using them too much. As unpleasant as a tax lien is, it is still not revolving and therefore doesn’t negatively impact your “Amounts Owed” Section. This also applies to the utility collection. Little Macy’s however, as insignificant as it may seem greatly outweighs the other two as it would severely damage the points in the “Amounts Owed” section as well as “Payment History”

In other words, sucks to be Jim, unless Jim knows us like you do, and I’m sure if he did he would send himself and anyone he knows over to 1-866-595-6313 to receive some amazing credit assistance.