Your credit report reflects you.
Your credit report contains important information about you. It contains your full name, SSN, birth date, driver’s license number, past and present home addresses, and your employment history. Your credit report also contains information about your past and present transactions with various financial companies.
Your credit report completely reflects all your accounts- the date these were opened, what type of accounts these are, your debts as well as your payments. In short, it defines your credit worthiness as an individual.
Creditors and financial institutions, as well as landlords and employers check on a person’s credit report to evaluate credit worthiness. Those who have poor credit report and those who do not have a credit history usually find it more difficult to obtain loans, bank accounts, and employment. Hence, it is crucial to be aware of your credit status and ensure that your credibility and reputation is protected. Having these bad elements in your report can greatly damage your credit worthiness. Therefore, do all your best to avoid them.
Here are the elements that you never want to see in your credit report:
Balances that are left unpaid for 6 months or more can be considered as “charge-offs” or “uncollected”. When your creditors deem your debts as charged-off or uncollected, it will be reflected in credit report and will remain there for up to seven years.
Accounts in collection.
Even if a creditor has already deemed your debts as uncollected, they may still hire a third party debt collector to collect your payments. This means, you will still be required to pay but your report has already been damaged.
A record of bankruptcy will remain in your credit report for seven to 10 years. Some people have managed to slowly rebuild their credit after being discharged from bankruptcy. However, a record of bankruptcy creates a very negative impression and may take quite some time to rebuild.
If you have mortgage loan that you failed to pay off, your lender will be filing for foreclosure. Not only will you be losing your home property but a record of foreclosure will remain in your report for seven years. This means, you’ll have a harder time convincing lenders to grant you new loans.
Tax lien will remain in your report for 15 years and 10 years if you choose to pay them. Not paying your taxes is a grave offense which can result to losing your property. If your mortgage loan has been foreclosed because you did not pay your taxes, you will be still accountable to pay for your mortgage.
If your creditor files for a lawsuit against you because of unpaid debts, it will remain in your credit report for seven years.
All inquiries from the creditors you submitted applications to will be reflected in your credit report. Too many inquiries and rejections can also affect your credit rating.