Seven most important items on your credit history that hurt your credit score the most.
The credit score is calculated by keeping in mind certain factors. Whenever there is a change in the reporting of these factors on your credit report the credit score gets affected. The following is a list of the commonest and the most damaging items of information that can hurt your credit score.
· Late payments reported on your credit report will have a negative impact on your credit score
The payment history of a consumer makes up about 35% of the credit score. This is a large chunk. Any late payments will result in a negative impact on your credit score. Any late payment that is reported to the credit bureau will stay on your credit report for a period of seven years even though you bring the account current soon afterwards. Late payments are usually not reported immediately to the credit bureau. A lender typically is only reports payments that are late by 30 to 60 days.
· Missing payments in the past on credit card and loans will have a negative impact on your credit score
Missing a payment completely is worse than being late on one particular payment. Missing payments regularly on a credit card bill or a loan may result in the account being declared delinquent which may result in the lender of charging off the account. A charged off account in the credit report has a very bad impact on the credit score. The next step will be for the lender to send the account to collections which will result in a collections account or so opening in your credit report which will be very bad for your credit report.
· Defaulting on a loan also has a negative impact on your credit score
Just as in a credit card if you default on a loan it will have a severe impact on your credit score. Defaulting on major loans such as home Mortgage loans for automobile loans is considered to be very damaging for the credit score.
· Foreclosure on your home will likely reduce your credit score rating
Since a home loan is one of the most important loans that a person is likely to take his lifetime, the inability to carry on the payments resulting in the foreclosure on the home is considered to be a serious affair and a serious statement on the financial instability of consumer. Future lenders may be very reluctant to give you another home loan once you have had a foreclosure on your credit report.
· Federal court judgment Against you for payment of the debt will reduce your credit score rating
If you have been sued in a court of law for unpaid debt and have had a federal or a civil court judgment passed against you in favor of the lender then not only does it reflect on your financial problems but also your unwillingness to pay your debt as the court had to get involved to make you pay back the money that you owed. However once a judgment has been passed against you must do your best to pay off the judgment as soon as possible.
· Having high credit card balances or maxed out credit cards will have a negative impact on your credit score rating
Having a high credit card balances or maxing out your credit cards repeatedly will give the creditor is the impression that you are trying to live be on your means by supplementing your income using credit. The credit scores considered a person using most of their credit limit as a high risk. Maxing out your credit cards or using close to the credit limit of the card will hurt your credit score.
· Filing for bankruptcy will have a negative impact on your credit scores
Filing bankruptcy is can still to be the last option in the dire most situations. It is the last resort for someone who is unable to pay back the money that he borrowed. A bankruptcy can stay on your credit report for a period of 7 to 10 years. During this time you will find it increasingly difficult to get approved for new credit. Even after the bankruptcy has been taken off your credit report lenders will usually ask you a question whether or not you have ever filed for bankruptcy during the credit application approval process. Hiding information from a lender is considered to be illegal. So even if the bankruptcy information is no longer on your credit report you’ll have to inform lender about your previous bankruptcy filing which could impact the decision of the lender. Filing for bankruptcy has a very serious impact on your credit score. You can however try and rejuvenate your credit rating soon after you have completed your bankruptcy filing by importing fresh positive credit data to your credit report. This can only be done by using some form of credit such as credit card.