3 - Charge Offs.
When you do not pay off a credit card account or a loan account for a period of three to six months, your creditors are generally going to assume that your account is non collectible, or that it is in default. When this occurs, your creditor will report it to your credit bureaus, stating that the account has been charged off. This information can remain on your credit report for a period of seven years. Many innocent victims fall prey to charge offs because their identities had been stolen. The best way to protect your credit is to take steps toward having your credit monitored so that if your score changes, somebody will let you know.
4 - Bankruptcy.
Depending on what state you are living in, as well as which type of bankruptcy you end up filing, you may be able to remove some of your financial liabilities and debts on a legal basis. There are some forms of debt that are not part of this deal, however, including but not limited to money that you owe to the IRS, and money that you owe in child support. When you file for bankruptcy, not only will your credit score take a tremendous hit, but it will continue to suffer for a period of as many as ten years.
5 - Judgments.
If other methods of collection fail, some creditors may sue you for a debt through the legal system. If they get a judgment against you, this will appear in your credit reports, and will remain there for a period of as many as seven years. You must be cautious here because once the judgment is satisfied, the clock will begin anew and another seven years will be required for the bad mark to disappear.
6 - Thin Credit.
While all of these aforementioned negative items can have a bad impact on your credit score, another negative that is often missed is having a lack of credit. If you do not carry some kind of credit, then the bureaus will penalize you. You need to use credit wisely in order to build credit, because having no credit can be just as detrimental to your financial health and future as having bad credit. Someone with a thin credit file or no credit at all can actually have a lower credit score than someone who has terrible credit.
7 - State and Federal Tax Liens.
When you owe state or federal taxes to the IRS, and you do not pay them or make any effort to set up a payment arrangement, then the collection agency can file a tax lien against you, and this will prevent you from buying property until you have satisfied the debt to their liking. This is also true if you do not pay property taxes on property that you own. Not only will it negatively impact your credit report but you may also lose your property in the process.
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Originally posted 2009-04-16 05:00:30. Republished by Blog Post Promoter
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