Understanding Your Credit Report

Following is another great post by guest blogger and mortgage specialist, Brenda Alfano. If you have ever wondered how your credit score is affected by debt, credit card inquiries, and a variety of other things, read on…

Hello again!

This month I thought I would focus on credit – specifically negative credit and how long it stays on your credit report. It’s kind of a heavy topic (sigh!) but so important in many areas. Mortgage, insurance rates, renting an apartment, etc. My thanks to 360 Credit Consulting for their help with this information. So here we go with some of the most common negative credit items:

There are different types of bankruptcy, and each one remains on your report for a different amount of time. Chapter 13 bankruptcies may be removed from your credit report after 7 years. Chapter 7 and 11 bankruptcy can be removed after 10 years.

Tax Liens
Tax liens can stay on your report for different lengths of time depending on the state you live in. If you pay off the lien, it should show up as “paid”. It can be removed entirely after 7 years.

Foreclosures and short sales will stay on your credit report for 7 years.

Lawsuits and Criminal Convictions
Criminal convictions can stay on your record forever, though there are some less serious items you may be able to have expunged. Lawsuits involving debt typically stay on your report for 7 years, though the length of time may vary by state.

Consumer Debt
This includes unpaid debt on credit cards, department store cards and standard bank loans. These items will generally stay on your credit report for 7 years.

Late Payments
One or two payments that are a couple days late probably won’t show up on your report. But if you have a habit of making late payments or pay a bill more than 30 days late, it will show up on your credit report and stay there for 7 years.

Credit Inquiries
There are two types of credit inquiries: hard pulls, which are initiated by you (you apply for a new credit card, you go to buy a car) and soft pulls, which are not initiated by you (a credit card company wants to send you an unsolicited “prequalified” card). Hard pulls remain on your report for 2 years, while soft pulls only remain on it for 1 year. It should be noted that soft pulls do not affect your credit score.

What Can I Do if Something Outdated is on My Report?
The three major credit reporting agencies are Experian, Transunion and Equifax. These three bureaus automatically track the filing dates for credit items and pull them off as soon as they are “expired”, so to speak. To verify that this happens on schedule, pull your credit report about a month after the negative item should have been removed. If it’s still showing, you’ll want to file a dispute with the reporting bureau. You can do this by visiting the reporting agency’s website. Be very careful about filing disputes if you want to get a new mortgage as it will be required to be removed from your credit which will usually lower your score. Talk to your lending professional. See more at: http://www.360creditconsulting.com/how-long-do-negative-items-stay-on-my-credit-report/#sthash.Vw7wFt57.dpuf

Talk to you next month!

Brenda Alfano
Mortgage Consultant
Absolute Mortgage
MLO# 229897

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