Negative information


What is negative information?

Negative information is data in a consumer’s credit report that lowers their credit rating. Credit reports also contain positive information such as payments on time and loans that have been repaid in full.

Understanding negative information

Negative information includes items such as late payments on loans and credit cards, overdue accounts, write-offs, accounts that have been sent for collection, bankruptcies, short sales, deeds in lieu. foreclosure and seizures.

While technically not considered negative information, certain types of inquiries can hurt your credit score. There are two types of queries: hard and soft. A serious investigation occurs when a lender or other business checks your credit as part of the process of determining whether to approve your loan or credit application. Minor requests happen when someone examines your credit as part of a background check or when you check your own credit. Sweet inquiries do not affect your credit score.

One serious request can lower your credit score, usually by a few points. If you make a lot of credit applications over a short period of time, it may seem bad to potential lenders who may suspect that you are over-exhausting yourself.

The consequences of negative information

Negative information will hurt your ability to get the best credit cards and the best loan terms. Too many negative items or even one very negative item can mean that you will not be eligible for a credit card or loan at all. Negative information will eventually leave your credit report, but how long it takes depends on the item. Foreclosures stay on your credit report for seven years, while Chapter 7 and Chapter 11 bankruptcies stay on your credit report for up to ten years, and Chapter 13 bankruptcies last for up to seven years.However, having other accounts in good standing will reduce the impact of negative items over time, even before they file your credit report.

If your credit report contains negative information that is false or inaccurate, you should contact the credit bureau and try to have the negative information removed. You could find yourself in this situation if the credit bureau makes a mistake, if one of your lenders or creditors makes a mistake, if your identity is stolen, or if someone else’s account is mistaken for yours. . If your credit report contains negative information resulting from financial errors or hard times, a combination of the positives and the passage of time will improve your credit score. You also have the option of adding an explanatory statement to your credit report that provides information about the circumstances related to that item or incident.

In addition to the negative elements, there are certain risk factors that can lower your credit score. If you’ve opened too many new accounts recently, don’t have a combination of different types of credit, have a very short credit history, or are using up a large percentage of your available credit, your score will be below what it could be. be if you had a long credit history, few or no new accounts, several different types of credit, and a low rate of credit utilization.

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