Credit Report Breakdown
On all credit reports, the information listed is simply either positive and can help you or negative and will hurt you profile. In the world of credit, your score is only a small part of what lenders, creditors and financial institutions use to determine your credit worthiness. The combination of the different accounts all help to tell a financial story, these are some of the different types of negative accounts that are usually shown on consumer credit profiles:
Charge Offs
A charge-off is an entry on your credit report that indicates a creditor, after trying and failing to get you to make good on a debt, has given up hope of getting payment and closed your account. A charge-off is considered a derogatory entry in your credit file—a serious negative event—and it can adversely affect your credit scores and your ability to borrow additional funds.
Collections
If you fall behind on payments, the lender or creditor may transfer your account to a collection agency or sell it to a debt buyer. This generally occurs a few months after you become delinquent, or the date you begin missing payments or not paying the full minimum payment.
Bankruptcy
Bankruptcy is a special legal proceeding you can use to reorganize or get rid of your debt, depending on your financial situation. Bankruptcy can be helpful if you’re overwhelmed with financial commitments, but it could also negatively affect your credit. A bankruptcy will generally stay on your reports for up to 10 years from the date you file.
Repossessions
Repossession is a process where an auto lender can take back possession of your vehicle, sometimes without warning you in advance or having permission from the court. Repossession typically occurs after you fall behind on your auto loan payments. Depending on your contract, your lender may be able to start the repossession process after the first missed payment.
Education Loans (Student Loans)
An education loan is a sum of money borrowed to finance post-secondary education or higher education-related expenses. Education loans are intended to cover the cost of tuition, books and supplies, and living expenses while the borrower is in the process of pursuing a degree. Payments are often deferred while students are in college and, depending on the lender, sometimes they are deferred for an additional six-month period after earning a degree. This period is sometimes referred to as a "grace period."
Hard Inquiries
Hard inquiries are also known as hard pulls and happen when a creditor checks your credit for the purpose of giving you a loan or credit card. A soft inquiry, or soft pull, is where you or a company is simply looking for information without your seeking credit. A hard inquiry can affect your credit score and remain on your credit report for two years.
Medical Debts
Typically, doctors and hospitals don’t report debts to credit bureaus. Rather, they turn their unpaid bills over to a debt collector and it is the collection agency that reports them. In fact, just one collection account can cause a good credit score to drop 50 to 100 points. Medical collections are no exception to this.
Evictions
The term eviction refers to the civil process by which a landlord may legally remove a tenant from their rental property. Eviction may occur when the tenant stops paying rent, when the terms of the rental agreement are breached, or in other situations permitted by law. Evictions in the United States are governed by individual states and certain municipalities. Landlords are required to inform tenants they are being evicted with a notice that specifies the reason for the eviction and the number of days before eviction proceedings begin.
Tax Lien
A tax lien is a legal claim against the assets of an individual or business that fails to pay taxes owed to the government. In general, a lien serves to guarantee payment of a debt such as a loan, or in this case, taxes. If the obligation is not satisfied, the creditor may proceed to seize the assets.
Book a Consultation
More questions related specifically to your situation?
Book an appointment to have your free consultation with us today!