 |
|
 |
|
|
Vitesse Process
1. Complete Agreement
2. Credit Review
3. Free consultation
4. Get started today! |
|
|
 |
|
|
|
|
|
|
FICO Score Negative Accounts & Public Records
How does foreclosure affect a consumer's FICO score?
There is no doubt that a foreclosure has a strong and negative impact on an individual's FICO score. Fortunately, however, a person can repair his or her credit score even after experiencing foreclosure. One way to begin credit repair is to pay off any outstanding loans, such as credit card balances, car loans, and other debts. This can help reduce the impact of the foreclosure over time. In fact, if other aspects of a credit report are kept in order and bills are paid on time diligently, individuals can hope to see gains in their FICO score in a shorter time frame.
Are there options besides foreclosure that will do less damage to my credit?
Any account involving a mortgage that was not paid as agreed will hold similar weight and negatively affect your FICO score. With the rise in foreclosures have come alternatives known as "short sales" and "deeds-in-lieu of foreclosure." While either of these options may be preferable to foreclosure depending on a home owner's circumstances, neither of them will make a difference in a consumer's credit score. Like a foreclosure, both short sales and deeds-in-lieu of foreclosure are considered an unpaid debt and will affect credit ratings the same way as well.
Is bankruptcy easier to repair than foreclosure?
In terms of a consumer's FICO score, both bankruptcy and foreclosure have a very negative impact. However, foreclosure is often treated as a single account--the account involving your mortgage. Bankruptcy, on the other hand, usually leaves numerous accounts unpaid, which can be more damaging to a consumer's credit than foreclosure. While foreclosure is a traumatic experience for many consumers and does damage credit, consumers should keep in mind that it is still only one negative item on a credit report--the negative effect it has on credit does not last forever, provided borrowers go on to adopt reliable habits and use the opportunities they have to build a reliable credit history.
How Public Records Influence Credit Scores
Public records are those that are generally open to view by the public. They include legal documents from institutions like a court of law, as well as documents created and maintained by the local and federal government. Many public records are not taken into account on a consume's credit score, including divorce records. Other records, however, are taken into account in an individual's credit rating--these include bankruptcies, tax liens, and other financial documents. A negative public record--even one that has been paid--can affect a person's FICO score.
Like foreclosures, the affect of an adverse public record lessens with time, but this type of record can remain on a credit report for up to 10 years.
How Judgments Affect Credit
When a debt remains unpaid, eventually a lender may summon the borrower to court. If at all possible, avoid this scenario. Before handling a credit obligation in court, negotiate with the lender to find an alternative means of settling the issue. When judgment is passed against an individual who owes debt, the judgment remains on the individual's credit record for 7 years. Collection agencies and companies are often willing to work out a settlement with borrowers in order to collect on the debt that is owed. It is advantageous to a consumer to take advantage of any arrangement that allows him or her to fulfill his or her credit obligations--as the results are directly visible in the individual's credit score.
Specific time frames involving negative marks on an individual's credit include the following:
Unpaid Credit Accounts:
From the first missed payment leading to delinquency, the mark remains on the consumer's credit report for 7 years. On the other hand, positive open information can remain indefinitely. If, for example, an account is closed in good standing, it typically remains on an individual's credit report for 7 years from the date the account is closed.
Negative Collection Accounts:
After the first payment missed that leads to collection, the collection account remains on the borrowers credit report for 7 years.
Adverse Public Records:
- Bankruptcies including Chapter 7, Chapter 11 and Chapter 12 remain on a report for 10 years from the date it is filed.
- If Chapter 13 bankruptcies are complete, they remain on the report for 7 years from the date paid. If they are not complete, they stay on the credit report for 10 years.
- Tax liens remain for 7 years from the date filed if paid and remain indefinitely if not paid.
- Any judgment stays on a credit report for 7 years from the date it is filed.
Credit Inquiries:
Credit inquiries, or official credit checks, stay on a credit report for 2 years.
For New York State Residents:
Satisfied judgments stay on a credit report for 5 years from the date filed.
Paid collections remain 5 years beginning with the date of the last activity.
For California State Residents:
Tax liens stay on a report for 7 years from the date filed.
To find more information, see my.fico and Fair Isaac Corp.
|
|
|
|
|
