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Credit Report Basics
What Makes Up a Person's Credit History?
The purpose of a credit report is to provide a snapshot of a person's long-term credit habits. This information is used by lenders and agencies to determine the likelihood that an individual will repay a loan on time. Details on a credit report include the following:
- Payments that are late by 30 or more days
- The amount still owed on a loan
- The size of monthly payments on loans
- The total amount of credit open to the individual
Any outstanding loans show up on a credit report, including those from auto companies, banks, credit cards, mortgage lenders, and even store credit cards. Because the monthly payment of loans can rise or fall with the interest rate, sometimes consumers use debt consolidation services to bundle a few loans into one, thereby reducing the total sum of their outgoing monthly payments.
What Can Damage a Credit Rating?
The red flag lenders look for are outstanding debts, and in particular those that are deemed permanent losses to lenders. Examples of permanent losses include foreclosure and bankruptcy. Note that while foreclosure involves one account (the mortgage loan), bankruptcy generally involves several accounts, including the mortgage. Bankruptcy and mortgage foreclosure help can be of benefit to some consumers, especially those who are in otherwise good standing with lenders.
How Do Unpaid Bills Affect a Credit Report?
The amount of damage an unpaid bill causes is judged by the sum of the unpaid balance, along with the number of such instances. Unpaid balances can stay on a credit report for up to seven years. If a consumer has one unpaid bill that was outstanding for a 30-day period, personal credit repair may not require extensive measures provided the individual is otherwise in sound standing. These consumers should nevertheless seek credit repair advice to be sure they take proper steps to ensure optimum credit ratings moving forward. On the other hand, when debt from several accounts remains unpaid for long periods of time, the damage to credit is more serious. Individuals in these circumstances should use any available resources to learn how to raise their credit scores, including reliable websites, the lenders themselves, and they can also seek professional credit repair specialists.
What is the Difference between Foreclosure and Bankruptcy?
Any loan that is marked as permanently outstanding damages credit. These include "write offs," foreclosure, bankruptcy, and others. Unpaid loans can stay on a credit report for seven to ten years, but the amount of damage each does differs depending on a consumer's other accounts. Foreclosure is essentially a permanent loss on an unpaid mortgage loan. Credit repair after foreclosure is possible, but it takes time. A foreclosure stays on a credit report for seven years, but because a foreclosure involves one account, other accounts eventually can balance its effect on a person's credit history.
Bankruptcy is also permanently unpaid debt, but it involves several accounts, often including the mortgage, monthly bills, and other loans. For this reason, bankruptcy can do more damage to an individual's credit rating than foreclosure. Repairing credit after bankruptcy is possible, but it takes years and diligency on the part of the consumer. In the case of bankruptcy, an individual should seek the help of a professional to be sure that he or she is taking the right steps as early as possible.
Companies such as Vitesse Financial can help clients repair their credit, even if they have filed for bankruptcy. Vitesse Financial offers affordable credit repair services such as credit repair debt consolidation for a long-term approach to credit repair after bankruptcy. In addition, we can help repair your credit by fixing and removing errors on credit reports including late payments, repossessions, closed accounts, liens, judgments, charge-offs and many other issues. We encourage you to contact Vitesse Financial to learn more about bankruptcy credit repair and how we can help you.
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