6 Negative Credit Status’s

Making mistakes when it comes to your credit is a lesson that many people learn the hard way. Constant phone calls, mail, and threats can make a tough financial situation worse. Either how well or how poorly you manage your debts and finances are available to creditors to see when you apply for credit, such as for a retail store card, or even an auto or home loan. With that being said if it is not too late for you, it is best to prevent any of the 6 worse status’s to show up on your credit report consisting of:

Charge-offs

When you miss payments for several months (exact time determined by lender) they may choose to report your account as a charge-off, stating the debts unselective. The creditor in returns writes the account off, reports it to the credit bureau, and it remains on your credit report for 7 years. Simply because a debt has been charged-off it does not mean that you are not responsible for it. If you pay the debt off the status on your credit report will appear as either charged-off paid or charged-of settled.

Collection status

Some creditors will not choose to charge off your debt to them, they will sometimes hire a third-party collection agency to go after you to collect the debt. Some collection agencies will use whatever tactics they feel necessary to collect a debt. You do have rights in this situation and make sure that you become informed so you know what they can and cannot do.

Foreclosure

A foreclosure is when an individual defaults on a mortgage or home loan. The lender will repossess the home and auction if off to recover the amount of the mortgage. Foreclosures can severely damage a person’s credit, foreclosures remain on ones credit for seven years.

Bankruptcy

When an individual files bankruptcy it allows them to removed of liability for some of their debts, it depends on the type of bankruptcy filed. Bankruptcy information will continue to reflect on your credit report for 7 to 10 years after it is filed, but oftentimes a person can begin to rebuild a positive credit history after debts are discharged.

Judgments or lawsuits

Creditors may choose to take you to court and sue for a debt, if other forms of collection has failed. If they can prove the debt or lawsuit against you, a judgment will be entered against you. Judgments remain on your credit report for 7 years, even after the debt has been satisfied.

Tax liens

A tax lien is pursued when taxes are not paid on a home or piece of property. The government can then seize the property and auction it off for the unpaid taxes. If an individuals home is foreclosed on due to a tax lien, they are still responsible for the mortgage on the home. Unpaid tax liens remain on a credit report for 15 years, paid tax liens remain for 10 years.

As you can see each of these status’s can have a crucial impact on your credit report and ability to progress in your future financially, even after the debts are paid. It is best to avoid these circumstances at all cost, but if you do find yourself in a serious financial bind there options available to you to repair your financial outlook.