Credit report Entries – The Great and the Bad
As time goes on, consumers are becoming more and more aware of the importance of both their credit history and their credit score. These two pieces of information are vital tools for lenders, who use them to decide whether or not to grant a loan or credit to a consumer. Higher credit ratings and reports with positive entries have a tendency to lead to credit; low scores and negative entries are likely to lead to declined applications. While consumers may understand the importance of credit history, they may not understand what types of entries seem on the document or how long they stay there.
While the credit score offers a quick summary of a potential client's monetary health, it is the report that provides all of the details that lenders want to see. Previous debts, installment loans and mortgages are listed there, in addition to bankruptcies, tax liens and more. If you have a credit card, it's listed. If you had a car loan that you paid off five years ago, it is listed, and the report will note whether you paid on time and in full.
Positive entries on your report will include paid debts, open credit accounts in great standing and closed accounts. Contrary to popular belief, positive entries do not seem on your credit score indefinitely. Open accounts stay on your report for provided that you have them, with extra entries if you make late payments. Closed accounts stay on your report for a maximum of ten years. After that, they are removed from the report.
Negative entries on your report will consist of things like unpaid tax liens, bankruptcies, and unpaid installment loans or credit card debt. These are "red flags" that have a tendency to catch the attention of lenders rather quickly. If you have quite a few negative entries and a so-so credit score, you may find it hard to obtain extra credit. On the positive side, negative entries disappear from your credit profile after seven years, with the exception of Chapter 13 bankruptcy filings, which stay for a full 10 years.
The key to a healthy credit profile is generally paying your bills in full and in a timely manner. Prompt payment of your bills when they are due will also help you maintain a healthy fico score. If you have negative entries, they will fade away in time, but great entries from open charge card accounts can stay indefinitely. For that reason, you should do your ideal to repay your bills promptly in order to keep your credit profile in tip-top shape.
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