Published on 06/6/2009

Learn which bad credit report key entries are the most damaging, know when to check your report and how to fix credit report errors yourself to improve scores.

Bad Credit Report Key Entries And How To Fix Credit Report Errors To Improve Scores

What's the big deal about credit reports? Loan lenders and credit card issuers use details in your credit report to determine if you are a high risk or not. If so, your application will likely be rejected or will be approved but at a high interest rate. Below are key entries you never want placed onto your credit report:

Chargeoffs - Missing payments for 6 months or more could cause your creditors to deem your account as uncollectible. When this happens, the creditor writes off the account and updates your credit report as charged off or written off and uncollectible. Charged off accounts remain on your credit report for seven years.
Debt Collections - Not only will creditors charge-off your account after a period of non-payment, they may also hire a third-party debt collector to attempt to collect payment from you. Your credit report may or may not be updated to reflect a collection status. Sometimes the debt collector places an entry on your credit report or the original creditor places a note on your report indicating the account is in collection status.
Bankruptcy - Although bankruptcy filing allows you to legally remove liability for some; or all, of your debts depending on the type of bankruptcy you file, your credit score still takes a serious hit. For 7 to 10 years your credit report will list each of the accounts included in your bankruptcy. Rebuilding credit after filing bankruptcy is possible, though difficult and time consuming.
Foreclosure - If you allow your home to be lost, what other types of loans are you willing to default on? When you default on your mortgage loan your lender will repossess your home and auction it off to recover the amount of the mortgage. Foreclosure can severely damage your credit, limiting your ability to obtain other loans and credit cards in the future. A foreclosure will remain on your credit report for seven years.
Tax Liens - Not paying the property taxes on your home or another property is another red flag to lenders. Also, the government can seize the property and auction it off for the unpaid taxes. Even if your home is foreclosed because of a tax lien, you are still responsible for repaying the mortgage loan. Non-payment of the mortgage will also hurt your credit. Unpaid tax liens remain on your credit report for 15 years, while paid tax liens remain for 10.
Lawsuits or Judgments - If collection efforts fail, some creditors may take you to court and sue you for a debt. If the lawsuit is accurate and a court-ordered judgment is entered against you, it will remain on your credit report for 7 years from the date of filing, even after you satisfy the judgment.

Now that you know the key credit report entries you don't want on your credit report, you should check your credit report at least yearly to see how you're doing. And, there are other events/occurences when you should check your credit report, such as:

Before you apply for a large amount of credit, like a new home loan or a car loan.
After your application for credit (whether a loan, credit card or other line of credit) has been rejected. This is one occasion when you are entitled to a free credit report.
If you suspect your identity has been stolen.
If you're making a plan to repair credit or to fix credit report errors so you'll know where to focus your efforts.
If you're developing a budget (or a new budget) to get out of debt.