Not all things are created equal and this goes for negative credit listings on a credit history. Lenders, companies, and reporting agencies give more weight to some negatives than to others.
Bankruptcy
Filing for Chapter 13 or Chapter 7 bankruptcy is one of the worst things that you can do to your credit report. It tells lenders that not only will you not pay your debts but that you will stiff them with the bill in the end. The recent change in the laws has made it more difficult to file bankruptcy, but this is a negative credit listing that will remain on your credit history for ten years.
Other Public Records
This is the information that is published by the county, state, and federal courthouses around the country. The same or similar information may be published differently in the various locations so it is hard for the credit rating to read these judgments but public records will pull down your credit score.
Tax liens will stay on your credit history for seven years AFTER the lien is paid in full.
Child support – past due amounts of child support could show up on your credit history and negatively effect your credit score.
Other judgments could include mechanics liens, contractor’s liens, or any financial ruling against you.
Collections
Once you default on your payments or get far enough behind then a company will probably turn the debt over to a collection agency. Accounts that show up as actively in collections can cause your credit score to drop greatly. The good news is that collection companies may be willing to remove a collections listing when the consumer agrees to pay the debt in full.
Foreclosures
Although these are not as damaging as bankruptcy or other public records, it still ranks at the top for problems on your credit report. These listings are especially damaging when you are searching for a mortgage. You want to include a credit statement with these listings if there were special circumstances involved.
Charge Off Accounts
One of the first things the experts recommend when consumers are working to get debt free is to work out a pay off agreement with creditors. What many people don’t realize is that any time you pay off an account for less than the balance the transaction will show up on your credit history as a charge off. It alerts other lenders that although the account was paid it was not paid in full.
Late Payments
The longer you go without paying then the more it will hurt your credit score. If you must pay late then make the payment as soon as possible.
Up to 30 days – some creditors will not even list a late payment until it is over 30 days late.
30 to 60 days – just one day over the 30 days and you are into negative listings on your credit history that will pull down your credit score.
60 to 90 days – this is usually reflects and account that is three months behind and it shows poor judgment and responsibility on the part of the consumer. Creditors and lenders put more weight on these long term late payments.
Past late payments – late payments begin to lose their importance after two to three years after they first show up on a credit history.
All negative listings in your credit history can affect the credit score that the rating companies issue for you. A lower score can limit your credit opportunities and also the interest rates that you qualify to receive. The best plan it to work on removing all negative listings from your report.
Next: Bad Reports