Bad Things You Don’t Want to See in Your Credit Report

Did you know that the information contained in your credit report can open or close opportunities for you? In this article, let’s discuss bad remarks that you’d never want to see in your credit report:

1. Charge-offs. Charge offs are debts that have been unpaid for so long that creditors have given up collecting them. But don’t think that it’s a good way to escape from your payment obligations. Debts that have been charged-off will be indicated in your credit report and can instantly drive away potential lenders when you apply for new accounts. It could stay in your report for seven years.

2. Debt collections. When a borrower defaults from payment, a creditor can assign the collection of the account to a separate agency. Debts passed on to a debt collection agency will also be reflected in your report. Needless to say, the fact that you have defaulted from your debts can send out a negative impression to a potential lender.

3. Bankruptcy. A borrower may resort to bankruptcy in extreme situations. Although it is a legal option which could discharge a person from debts and liabilities, it is still a derogatory remark that will remain in your credit report for seven to ten years. If you have filed for bankruptcy, you should work on rebuilding your credit immediately after your debts have been discharged.

4. Foreclosure. If you are in the middle of your payment, missing your monthly payment can lead to foreclosure. This process is when the creditor takes over your property, put it on sale and use the proceeds to pay your balance. A record of foreclosure is not a very encouraging detail that you would like to see in your credit report. This is why it’s very important to pay attention to your home loan payments.

5. Tax liens. If you fail to pay your property taxes, the government can seize your property, put it in an auction and use the money to pay down your tax liens. If your property has been foreclosed, the proceeds will be used to pay down your debts to your mortgage lender and tax liens as well. Tax liens will remain in a credit report for ten to 15 years.

6. Lawsuits and Court Judgments. It’s important to keep in mind that if you do not take your payment obligations seriously, a creditor can take legal action against you by filing a lawsuit. If the case is found valid and a court judgment has been made, it will be included in your credit report and remain for up to 7 years.

Consumers are advised to check their credit reports on a regular basis. If you seen any misinformation in your credit report, particularly in the Public Records section of the document, you can send a letter to the credit bureau that issued your report. For instance, if it has been seven years since you’ve been discharged from bankruptcy, ask the credit bureau to remove the remark from your credit report. Don’t let negative information stay in your report for than the time it’s due time to prevent it from inflicting damage to your personal credit.

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