Your credit score goes up and goes down depending on lots of factors. Most people aren’t quite sure what makes it go up and down, but major issues have the biggest impact
When I was working in corporate America, I always had a great credit score. It was somewhere in the vicinity of the high 700’s
Once I lost my job and started creeping closer and closer to bank foreclosure of my home, my credit score sank to an all time low of 410.
As I started to pay off my debt, and get a handle on my finances, my credit score climbed. Last month when I purchased my new car and my credit report was pulled, it was a whooping 802.
The Biggest Issues That Will Hurt Your Credit Score
1. Anything that can be found in public records such as liens, judgments against you and of course the doozy of them all bankruptcy. All of these rank as some of the most damaging events on your credit score, but bankruptcy is the worst of them all. Whether it’s Chapter 7 or Chapter 13 it can stay on your credit report for up to 10 full years.
2. You know how you can sometimes be late making payments? Well, if you are 90 days late that is deemed “severe” and all severe late payments are reported on your credit reports. These late payments stay on your report for 7 years but new creditors are less likely to give it much consideration after 2 years.
3. Charge offs can occur after failure to make payment after 30 days although most lenders give you more than one month before a charge off occurs. They sell the debt to a collection agency and it remains on your credit report for 7 years from when the account was 180 days past due.
4. Collections occur after you have not paid your debt for over 90 days. It’s the second most common offense people make and will stay on your credit report for 7 years. Collections can occur for unpaid medical bills, school loans, credit card debt and they’re all equal in the eyes of the credit score.
5. Settlements occur when you or someone on your behalf negotiates a settlement of your debt. Typically the credit card company or bank will accept less than what is owed. Short sales fall into this category and yes, again it stays on your report for 7 years.
6. Repossessions typically occur with cars – at least that’s what most people think. But the truth is any loan that is secured by an asset can be repossessed. Even after they come and take your asset you still may owe them money. Again it stays on the credit report for 7 years.
7. Foreclosures have risen over the last several years and will remain on your credit score for 7 years.
None of these sound all that wonderful and the fact that all of it stays on for 7 years or more can be frightening.
But here’s some good news: what doesn’t hurt your score is how much money you make and how many credit cards you have as long as you are paying them on time each month. Good news for many.
[tweetthis]No matter how much you make you can always establish good credit. [/tweetthis]
If you can refrain from doing any of the above, you’ll be more likely to preserve your credit score.
No matter what ends up happening, rebuilding your credit score can happen. It just takes time.