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Repair Your Credit Fast – The 7 Worst Things to Have on Your Credit Report

Most of us know that Bankruptcy or a Foreclosure on a credit report would cause your credit scores to plummet. I am going to show you five other items that you may or may not even know about. Since lending institutions and credit issuing banks use your FICO credit scores to evaluate you and your creditworthiness, you want to make sure that these entries don’t appear in your credit report.

Now, if you have 1 or more of these negative items in your Trans Union, Equifax, or Experian report, worry not. By subscribing to my newsletter and blogs, you will learn tips, tactics, and insider methods to handle these situations.

The Sinister 7

1. Debt Collections

Attorney debt collectors or debt collection companies listed on your reports are a huge negative. I have seen the impact from a collection agency on credit scores range from a drop of 30 points up to 85 points! Sometimes you get a “double whammy” effect because the original creditor will mark you account as a charge off and then you get the entry from the collection agency. Ouch!

2. Charge-offs

When you don’t pay on a credit account for 3-6 months, your creditors will deem your account “in default” or noncollectable. When this takes place, the creditor will report to the bureaus the account as “charge-off”. This information can remain on your report for up to 7 years. With identity theft being such a huge problem in this country, many innocent victims will find charge off accounts in their credit reports that they had no idea existed. You must take steps to protect your credit. You can do this by signing up for a monitoring service that will alert you whenever there is a change in your scores.

3. Foreclosure

Having gone through this process personally, I can tell you that there is hope when you think the world has crumbled around you. When you default on your mortgage, most lenders will take back possession of your home and depending on your state laws, auction it off within a certain time line. If there is any deficiency between what you owed and what they sell it for, then technically they can come after you for the rest or report the credit to the IRS. With all of the Foreclosure mess that is taking place right now in the marketplace, more and more banks are trying to work out arrangements with homeowners. The fact remains though, that they will have no choice but to report your late payment and the foreclosure process even if you work out a deal with them and stay in the home. This too will remain on your credit reports for 7 years.

4. Bankruptcy

Depending on the state you live in and which type of bankruptcy you file, you may be able to legally remove the financial liability for some or all of your debts. Child support payments and IRS monies, however are NOT part of the deal. No surprise there! I am all for some deadbeat dad who doesn’t pay child sponsor for his children not being able to wipe them out with bankruptcy, but Uncle Sam…well that is another story. Bankruptcies will remain on your credit report for up to 10 years.

5. Tax Liens – State or Federal

When you owe the IRS or State income taxes and don’t pay them or set up a payment arrangement, they will file a tax lien against you. When you try and buy a piece of property, until these liens are satisfied, you won’t be able to close.

If you don’t pay property taxes on your home or another piece of property, the government can seize it and auction it off for the unpaid taxes. One way or another, they will get their money. Unpaid tax liens can stay on your credit report for up to 15 years. Even if you pay them, they still report the lien for 10 years and it will impact your FICO credit scores immensely.

6. Judgments

Some creditors, businesses, or individuals tin sue you through the courts for a debt. If other collections fail and they get a judgment against you, this will report to the bureaus and stay on your record for seven years. You must be cautious here, because even if you pay or satisfy the judgment, the clock will begin again if you satisfy the judgment. I always instruct my clients and students to check their states statue of limitations.

7. Lack Of Credit or a “Thin Credit File”

While any of the first six negative items above can impact your scores tremendously, there is also a not often discussed negative in not having enough credit. If you pay for things cash and don’t carry a small balance on your ascribed cards, you can and will be penalized by the bureaus. Conversely, if you paid cash for your automobile, you might also be penalizing. My point is – whether or not you believe in applying for credit or using credit wisely, we are all judged to some degree by how we manage credit and that info is maintained by the large three credit bureaus. Would it surprise you to now that someone with a lean credit file can actually have lower credit scoring than someone with a few negative items in their file?

If you are looking to function inside the credit matrix (which by the way is becoming more and more invasive to our everyday life) you must learn how t

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