Finding out you have bad credit usually comes at the worst time. Many people don’t even know they’ve got bad credit until they get denied for a credit card, cell phone or car loan. Being denied usually motivates them to check their credit report. Upon checking your credit report you may find one or several of the negative items on their credit report that we’ll discuss below.
Fixing bad credit is not something that can be done overnight, but at the same time, you don’t have to wait years to fix it. There are things that you can do to immediately to take control of your credit and raise your credit scores so that you can get approved for a loan.
Credit utilization is one of the most important factors in determining your credit scores. It’s something you can control and something that can be improved upon immediately. Credit utilization is the amount of debt you have relative to your credit limits. It’s best to keep your credit utilization ratio below 30%. This shows creditors that you can manage your available credit responsibly. You don’t want to have your balances maxed out. For example, if you have a total credit limit of $10,000 and your balance is $3,000, you would be utilizing 30% of your available credit. The lower your credit utilization ratio, the better. So, paying down balances is something that can have an immediate positive effect on your credit report.
Removing Negative Items
Removing negative items from your credit report can also have a huge positive impact on your credit scores. While many people still don’t realize that it’s possible to have negative items removed from their credit reports, there are thousands of people disputing such items with the credit bureaus and getting them removed every day. It’s actually easier than you might think and also a much better alternative than simply waiting years for them to drop off of your credit report.
How Long Do Negative Credit Items Stay on Your Report?
The Fair Credit Reporting Act (FCRA) limits the length of time a credit bureau can report negative items on your credit report. Positive and neutral items can be and are usually reported indefinitely. Keep in mind that it is possible to have negative items removed from your credit reports. The times below are how long the negative items will stay on your credit report if you are unable to get them removed.
Charged off accounts or accounts that were sent to collections may be reported for up to 7 years plus 180 days from the date of delinquency.
Charge-offs occur when a creditor decides a debt is not collectible and rather than carry it on their books as an overdue or past due debt, they will eliminate it from their reportable past due accounts. By charging off the debt, the company gets an improvement in their accounts receivable report. That doesn’t mean the debt has disappeared. In most cases, the debt is sold to a “debt buyer” who pays pennies on the dollar for the face value of the debt. By purchasing the debt, the debt buyer can now attempt to collect the debt (plus court fees, interest, late charges, etc) by contacting the debtor and taking them to court for the debt’s value plus fees.
Collection accounts may be reported for up to 7 years from the date you first fell behind with the original creditor. Collections are complicated. Paying them off can actually hurt your credit scores because it resets the date from which it can be reported.
Late payments or delinquent accounts may be reported for up to 7 years after the date of the last scheduled payment. Even if you make the payment later, the account on your credit report will more than likely show that you were previously past due. However, some creditors don’t report the past due payment until a second payment is due. They don’t want to upset good customers who simply forgot to send a payment in and made it up the following month. However, under credit reporting rules, after a second payment is missed, all past due payments must be reported.
Bankruptcies may be reported for no more than 10 years from the date you filed. If your case was dismissed, the 10 years starts from the date of dismissal.
Foreclosures may also be reported for up to 7 years. In terms of buying a new house after foreclosure, you won’t be able to qualify for a new mortgage for at least 2 years and possibly longer.
Judgments may be reported for up to 7 years from the date a lawsuit was filed or until the governing statute of limitations has expired, whichever is longer. Most statutes of limitation are shorter than seven years, so 7 years is the likely maximum time judgments or lawsuits will show up on your credit report.
Repossessions may be reported for up to 7 years.
Under federal law, unpaid tax liens may be reported on your credit reports indefinitely. However, the credit bureaus may remove them after a decade or so. Paid tax liens may be reported from the date of payment for up to 7 years.
Negative Items Can Be Removed!
With credit repair, it’s possible to have negative items removed from your credit report. The simple fact is that questionable credit listings are either deleted or corrected by the thousands each and every day through the efforts of individual consumers and organizations like Lexington Law. In fact, Lexington Law has helped hundreds of thousands of clients and has removed over 9 million negative items in 2016 alone!
Call 800-220-0084 for a free consultation and complimentary, no-obligation credit score today!