Which of the following will likely lower your credit score?(1 point) Responses You are three months away from paying off your 5-year loan. You are three months away from paying off your 5-year loan. All your low balances on your credit cards. All your low balances on your credit cards. All of your accounts date back five years or more. All of your accounts date back five years or more. You recently declared bankruptcy.
You recently declared bankruptcy.
The factor that will likely lower your credit score is, "You recently declared bankruptcy."
The option that is most likely to lower your credit score is "You recently declared bankruptcy."
When it comes to credit scores, there are many factors that can impact it positively or negatively. While having low balances on your credit cards and accounts that date back five years or more are generally considered positive factors for your credit score, declaring bankruptcy is a major negative event.
To understand why declaring bankruptcy can lower your credit score, it's important to know that bankruptcy is a legal process that allows individuals or businesses to be relieved of their debts by a court. It is considered a last resort option for those in severe financial distress.
When you declare bankruptcy, it is often seen as a failure to manage your finances responsibly. As a result, it can have a significant negative impact on your credit score. Bankruptcy will generally remain on your credit report for a period of 7 to 10 years, depending on the type of bankruptcy. During this time, potential lenders may view you as a higher credit risk, making it harder for you to obtain credit or get favorable terms on loans. Even after the bankruptcy is removed from your credit report, its impact on your creditworthiness may still linger.
In summary, while having low credit card balances and accounts with a long credit history are positive factors for your credit score, declaring bankruptcy is a significant negative event that can lower your credit score for an extended period of time.