Credit reports are basically our financial report cards. Aced most of your high school classes? You can be sure you are on your way to college! But, what happens when you fail most of your classes? Bad grades can affect your GPA and thus, affect your college plans. Well, the same thing happens with credit reports. They can show all the correct payments you have made and this could even help you receive loans and credit cards. But, what happens if you see negative credit items? Then your financial “GPA” could be at risk. How so?

When you make late payments, missed payments, collections, or accounts that have been turned over to a collection agency, all of this can stay on your credit report for seven years starting from the date you missed your first payment! In the financial world, when you do not make a payment on time or in a regularly timely manner, it is considered delinquency and this shows up on your credit report as negative credit. The consequences of delinquency can be from paying a late fee to even go through foreclosure if you have not paid your mortgage.

When it comes to late payments, the average amount of years this negative credit stays on your report is seven years. But, when it comes to filing for bankruptcy, this can stay on your credit report for even 10 years! Why? Bankruptcy, known as the “credit score killer,” can knock 130 to 150 points off your credit score. We can consider it even worse than getting an F on a report card! In most cases, a completed Chapter 13 or 12 bankruptcy can be dismissed from your report seven years after filing. But in some rare cases, Chapter 13 may remain for 10 years. And when it comes to Chapter 7 and Chapter 11 bankruptcies, they go away 10 years after the filing date.

How can we avoid having negative credits?

• Avoid making late payments and establish a date and time you will pay your loans every single month.
• Pay off all or the negotiated amount with your creditor. Maybe the negative credit will still be there but the chances of him suing you won’t.
• If you have federal student loans, contact the Department of Education to know how they can help you.
• And when it comes to bankruptcy if you do go through it, don’t wait to start rebuilding your credit. Get a secured credit card, pay non-bankrupt accounts as agreed, and apply for new credit only once you can handle the debt.

Credit Reports and Negative Credit Items Review

Finding negative credit in your credit report can be stressful. But, following our tips and tricks, you can easily get through it. If you wish to have more help, contact Mediator Law Group today.