Things You Don't Want To See On Your Credit Report.
Your credit report, explained.
Your credit report works in a similar way to a report card you’d get back in school. It demonstrates your ability to repay debts and shows how capable you are at making good on your financial obligations.
Statistics show that 25% of consumers have a credit score of below 600 which is classified as a “bad” credit score.
Whether you have a good credit score or bad it can be turned around for the better. You need to improve your score so that lenders will be more likely to approve any future loans you might need.
Things to look out for on your credit report
- Debt written off: If you go a long time without making repayments for, say, a credit card or loan, the lender may eventually write off the debt and pass it on to a debt collecting service. Generally, this will occur after you miss about six repayments or a certain amount of time elapses without payment. Once the lender has reached this point, they will assume that you are never going to pay and cut their losses by moving on. This works well for them, but it may not work well for you. Your outstanding debt will count against you on your credit report.
- You’ve been handed over: If you’ve had any debt written off by a lender, your best bet is to pay the outstanding debt in full as soon as possible. Otherwise it will generally be sold to a collections agency that will attempt to retrieve the money back from you. Collections agencies often add their fee onto the original debt, meaning you’ll have to pay back an even higher amount. This information can stay on your record for seven years or more, depending on how long it takes you to pay up.
- Foreclosure: When you want a loan for a home, banks may ask you to have a good credit score. This information is kept in an official file that reports all your financial transactions from when you first started working. The credit bureau looks over this report to decide if it wants you to be eligible for a home loan or not. If you’ve previously defaulted on a home loan or mortgage, this will count against you.
These days it is easy to get your credit report online. Even if you don't have bad credit, you might want to check your report because it's important to know what's on there. It's also important to know what items you don't want to see on your credit report. Credit Health can help you understand the finer details of your credit report, and empower you to start making smart financial decisions.