Some derogatory credit marks, such as a bankruptcy, will remain on consumer credit reports for ten years, as will foreclosures, tax liens, and certain other judgments. When applying for new credit, it is important to make sure that you get the best deal to match your circumstances.
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As the old saying goes, “time heals all wounds.” The only way to effectively clear a negative credit report is to let time pass, while establishing new credit accounts. Most everyone, at one time or another, gets behind with his or her financial obligations. Credit reports will display these periods of slow or no payments for an average of seven years.
How did I get into credit trouble in the first place?
The most common cause for credit difficulties is being over-extended. For many years, consumers could apply for a pocketful of low interest, high limit credit cards. Often, new cards showed up in your mailbox without even asking! Just sign and spend!
When times got tough and the cost of living increased, many Americans turned to credit cards to help make ends meet. Unable to save, and with resources depleted, there simply weren’t enough dollars, to afford everything the average family needed and wanted.
Once debt limits were reached, managing monthly credit card payments became more difficult. The practice of borrowing from one account to make a payment on another became more prevalent. Then, a sudden reduction in family income, owing to a cut in hours or the loss of a job, made it impossible to catch up.
Despite all the warning signals, many consumers continued to live beyond their means, running up credit bills that they couldn’t hope to manage or pay off. The economic slow-down and global recession pushed many consumers over the edge and some were forced to default on their obligations.
What does my credit report show?
Like many documents, a credit report presents a snapshot in time of an individual’s financial health and well-being. Since the information continues to flow, reports will gradually change to reflect changes in the credit user’s financial standing and payment history. What was good credit, can quickly convert to bad. Bad credit, once reported, is very slow to disappear.
Credit reports show the payment history for any open accounts. Closed accounts are also listed, as are recent inquiries about your credit. Accounts that are current and up to date show “0’s” for the months they are open, but no payments required. Accounts that are paid on time show the number “1,” while accounts that are 30 days behind earn a “2.” Accounts that are 60 days late receive a “3.”
Credit bureau reports also show items of public record, such as:
- Court judgments
- Liens and garnishments
- Repossessions
- Foreclosures
- Bankruptcies
Accounts that are listed as eights or nines are considered “charge-offs,” meaning that the creditor has turned the account over to a collection agency, having been unable to collect the outstanding balance.
Can I fix mistakes or errors on my credit report?
One fast rule is the only items on a credit report that can be made to go away are blatant errors and other erroneous information that was incorrectly supplied to the credit bureau in the first place. Upon presenting written proof, errors can be deleted from a credit report. However, remember, there are three major credit-reporting agencies:
- Equifax
- Experian
- TransUnion
If there is an error common to all three reports, it must be changed in all three places. It is also not unusual for each of the three agencies to have significantly different information. This is why creditors often request a compilation report, combining the data of one or more reporting agencies.
Do credit fixing or cleaning efforts really work?
No! For the most part, companies that offer these services on a fee basis cannot do any more than you can on your own, with time and a little patience. There are no secrets. If the information contained on a credit report is yours, and it is accurate, it must stay on the report. If it isn’t, the bureau will be happy to remove it, once it’s proven to be erroneous.
There are agencies that provide free assistance and credit counseling services. One of these is Family Credit Management.
How can I get a copy of my credit report?
Credit reports are offered by many organizations for a one-time fee or on a subscription basis. A free annual report can be obtained by contacting, AnnualCreditReport.com. This agency may also be reached by phone toll free at: 877-322-8228
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