The 7 Worst Credit Report Entries That Can Ruin Your Score
It's easy to make mistakes when it comes to your credit. Some mistakes are so detrimental; you'd never want them to appear on your credit report because it hurts your credit score and your chances of getting approved for credit cards and loans. Worse, negative information can stay on your credit report for seven years, or 10 with a Chapter 7 bankruptcy. Do what you can to avoid having these negative entries added to your credit report.
Missing your payments for six months or more could cause your creditor to charge-off your account. A charge-off is the credit card issuers way of writing off your debt as uncollectible. However, you still owe the debt, and the creditor will still pursue you for the balance owed.
Charged-off accounts remain on your credit report for seven years, from the date the account is charged-off. That's a total of seven years plus 180 days from the date you first went delinquent.
Not only will creditors charge-off your account after a period of non-payment, but they may also hire a third-party debt collector to attempt to collect payment from you.
Many debt collectors report the collection account on your credit report, adding another negative entry. The collection will stay on your credit report for seven years, even after you pay it off. Fortunately, when you pay a collection, the account is updated to show that you paid in full.
Filing bankruptcy allows you to legally remove liability for some or all of your debts, depending on the type of bankruptcy you file. Your credit report will reflect each of the accounts you included in your bankruptcy. Even though the bankruptcy information will remain on your credit report for seven to 10 years, you can sometimes begin rebuilding your credit soon after your debts have been discharged.
If you default on your mortgage loan, your lender will repossess your home and auction it off to recover the amount of the mortgage. This process is known as foreclosure. When your home is foreclosed, it can severely damage your credit, limiting your ability to obtain new credit in the future. A foreclosure will remain on your credit report for seven years.
Repossession happens when you default on your auto loan payments, and the lender has to take possession of your car. You can be as little as a few days late on your payments, and the lender can begin the repossession process. If a repossession lands on your credit report, it will remain for seven years.
When you don't pay property taxes on your home or another piece of property, the government can seize the property and auction it off for the unpaid taxes. Even if your home is foreclosed because of a tax lien, you are still responsible for the mortgage loan. Non-payment of the mortgage will also hurt your credit. Unpaid tax liens remain on your credit report for 15 years, while paid tax liens remain for 10.
Lawsuits or Judgments
Some creditors may take you to court and sue you for a debt if other collections fail. If the lawsuit is accurate and a judgment is entered against you, it will remain on your credit report for seven years from the date of filing, even after you satisfy the judgment.