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Worst Bad Credit Causes

Credit users are in no way insured against making a mistake with their credit. However, the negative effect of some major credit card mistakes can have a really bad effect on your credit history.

Some of the things that you should avoid including in your credit report are:

  • Bankruptcies

    Depending on the bankruptcy you experience, you may be removed the liability on some or all of your debts. The accounts you have included in the filed bankruptcy will be reflected in your credit report. It is sometimes possible to start rebuilding your credit sooner than the seven to ten year time period during which the bankruptcy will be reflected in your credit report expires. However, your debts should be covered before you start working on the construction of a positive credit report.

  • Foreclosures

    Foreclosure is experienced when you default on your mortgage, which gives the lender the right to take possession of your house and offer it on an auction. This is done in order for the lender to recover the amount they have borrowed to you. Foreclosures can have a devastating effect on your credit score. As a result your ability to obtain future loans and credits will be greatly hindered. Seven years is the time period during which the foreclosed home will be marked on your credit report.

  • Tax Liens

    The failure to pay your property taxes may result in the gaining of possession on the part of the government of the corresponding property. It may auction it so that the unpaid taxes are covered. However, if you have a mortgage you are still responsible for the loan even if the home is foreclosed. Your credit score will be hurt if you don't pay your mortgage. 15 years is the time period during which the unpaid tax liens will appear on your credit report. If you have paid your liens, they will appear on your credit report during the following 10 years.

  • Charge-offs

    This term is used to refer to the writing off of your credit card account and qualifying it as uncollectible when you don't make you payments for the next six months. You should avoid such charges-off because you will have them in your report for the following seven years.

    Additionally, if your creditor doesn't receive your debt collections they have the right to give you on court. Even if you satisfy the judgment made on the lawsuit, the latter will appear during the following seven years on your credit report.

Finally, you should avoid these events from appearing in your credit report, since as you can see they have long-lasting effects. However, if you manage to show that you are a responsible borrower, you will be able to improve your credit score.

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