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Worst Entries for a Credit Report

January 21, 2009 by Shawn

When you check your credit report you’ll see numerous entries from your past and present:  personal loans, car loans, student loans, credit cards, etc.  Hopefully, all of your account entries are in good standing — they’ll be described on your credit report as “Current,” “Present,” “Paid as Agreed” or some variation.

Unfortunately, you may have some bad entries on your credit report as well.  Lates are bad, but they’re not nearly as bad as some of these:

Charge-Offs
If you stop paying a bill for more than 6 months (or longer), you may force your creditor to consider your account as being not collectible.  When this occurs, the creditor writes off the account as a loss and updates your credit report noting that your account has been “Written Off” or “Charged off.”  Charge-offs remain on your credit report for a period of 7 years.

Debt Collection Accounts
Once a creditor marks your account as being a charge off, they’ll normally pass you over to a debt collector to try and receive payment from you.  The creditor will also change the status of your account to “currently in collections” or some variation.  In addition, the debt collector may also place their own entry on your credit report stating that you owe $X amount.

Bankruptcy
Filing for bankruptcy allows you to legally stop paying your debts and be free of all liability of paying them, depending on the type of bankruptcy you file.  You credit report will reflect this.  And while the bankruptcy information will be reflected on your credit report for a period of 7-10 years, you should be able to restart building your credit again soon after your debts have discharged.

Tax Liens
When you fail to pay any kind of tax to the government, they have the ability to not only seize your property, but also add a tax lien on your credit report stating that you owe money.  Unpaid tax liens will remain on your credit report for 15 years, with paid tax liens staying put for 10 years.

Lawsuits and Judgments
If a creditor or debt collector has been pursuing you for years and feels that they’ll collect their money no other way, they may attempt to sue you and take you to court.  If they win and a judgment is entered against you (the court determined the debt is valid), it will remain on your credit report for 7 years.  This is regardless if you pay the judgment or not.

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