Lenders, insurance companies and even employers use credit reports to determine risk factors and consumer trustworthiness. Derogatory credit information may include delinquent payments, bankruptcies and high balances. How this information affects your credit report depends on your initial credit score and the severity of the event.
Types
Late payments, high balances, debt settlement, collection accounts, tax liens, credit application inquiries, foreclosures and bankruptcies all lower credit scores. Lender inquiries affect your score the least, whereas bankruptcies may lower your score as much as 240 points.
Time Frame
Most negative credit information remains on your credit report for seven years. Inquires stay on your report two years, and bankruptcies may remain for up to ten years. Unpaid tax liens may stay on your credit report indefinitely unless you are a California resident, in which case they are removed after ten years.
Effects
Derogatory credit information may result in less favorable lending terms, higher insurance rates and denied rental applications and may hinder future lending options and even limit employment opportunities.
Considerations
Check your credit report annually to make sure the information is correct. Rectify credit report errors by contacting both the credit-reporting agency and the company that reported the information.
0 comments:
Post a Comment