If possible, try to avoid these six things that can significantly damage your credit score.
- Charge-offs. Six months or more of missed loan or credit card payments can result in your account being deemed “non-collectable.” At that point, a creditor writes off the account and reports it to a credit bureau as “charged-off.” Charge-off information stays on your credit report for seven years from the date of the charge-off.
- Debt collections. Many creditors hire third-party collectors who attempt to collect payments on charged-off accounts. Collection accounts may show up on your credit report and/or the original creditor may place a note on your report indicating the account is in collection status. This information stays on your credit report for seven years from the date of the last payment delinquency.
- Bankruptcy. All accounts included in the bankruptcy will be identified on your credit report. A Chapter 13 Bankruptcy, where a plan is developed to repay all or part of your debts, stays on your report for seven years. A Chapter 7 Bankruptcy, which discharges all of your debts, stays on your report for 10 years.
- Foreclosure. Defaulting on your mortgage, by failing to make the loan payments, causes severe damage to your credit score and stays on your report for seven years.
- Tax liens resulting from unpaid property taxes. Unpaid tax liens remain on your report normally for 10 years at the discretion of the reporting agency; paid tax liens remain for seven years.
- Lawsuits or judgments. Creditors may take you to court and sue for a debt if other collection attempts fail. If the lawsuit is credible and a judgment is entered against you, it will remain on your credit report for seven years from the date of the filing, even if you pay the judgment.
Have you experienced one or more of these situations? There’s help! Visit Ent’s free and confidential financial counseling partner, GreenPath, for more information on how they can help you with free debt counseling or debt management plans. For more tips and financial education visit the Education Center.