The 6 Worst Things To Have Appear On Your Credit Report

March 20, 2010

Everyone at some point has made a mistake when it comes to their credit. Whether it was intentional or accidental, some mistakes are so detrimental you would never want them to appear on your credit report. Future creditors and lenders use your credit report to make decisions on whether they should extend you credit. Here’s a list of top 6 things you would never want to show up on your credit report.

1. Charge-offs
If you miss your payments for 6 months or more, then this could cause your creditors to deem your account as uncollectible. When this happens, the creditor writes off the account and updates your credit report as “charged-off” or “written off and uncollectible.” Charged-off accounts remain on your credit report for seven years.

2.Debt collections
Not only will creditors charge-off your account after a period of non-payment, they might also hire a third-celebration debt collector to attempt to collect payment from you. Your credit report might or might not be updated to reflect a collection status. Sometimes the debt collector places an entry on your credit report or the original creditor places a note on your report indicating the account is in collection status.

3. Bankruptcy
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.

4. Foreclosure
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 capability to obtain new credit in the future. A foreclosure will remain on your credit report for seven years.

5. Tax liens
When you do not 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.

6. Lawsuits or judgments
Some creditors might 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 7 years from the date of filing, even after you pay the judgment.

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