What Are The Negative Items That Impact Your Credit Score?
Do you know what the negative items that impact your credit score are? Is a problem with your credit report costing you? It could be, according to credit repair firm Lexington Law. Negative listings on your credit report could prevent you from getting loans or credit cards, or it could mean that you pay higher interest rates to borrow money. Your insurance company could be using information from your credit report to set the price of your premiums.
Understanding The Negative Items That Impact Your Credit Score
In many cases, your credit gets boiled down to one number: Your FICO score. FICO takes its name from the data analytics company (Fair, Isaac and Company) that originated the idea of a three-digit credit score for consumers. Your score ranges between 300 and 850 — the higher, the better — and is totaled based on:
- Your payment history
- The amount you owe creditors
- The age of your accounts
- The type of credit you have (mortgage, credit card accounts, other loans)
- New credit, including recent inquiries
What’s a good FICO score? Each lender may have a slightly different guideline, but in general, above 740 is excellent, above 670 is good, above 580 is fair and anything less is poor. To qualify for the best rates, you must have a score in the excellent or good range.
Your credit report explains your credit history in more detail, lists your creditors and accounts and notes any problems like late payments. The information on the credit report explains why you have a certain FICO score. By removing any negative items from your report, you’ll bump up your number and look more attractive to lenders. So first you need to understand all the negative items that impact your credit score.
The Impact of Negative Items on Your Credit Score
When you fail to make payments on time or have debt settlements or foreclosures on your record, that takes points off your score; Fair Isaac calls them “damage points.” The better your credit score, the more of a hit you take when you incur damage points. That means that one missed payment could drop your score by as much as 110 points, according to credit bureau Equifax. Even a hard inquiry on your report, such as occurs when you apply for new credit, can drop your score 15 points — enough to put you down into a lower tier. These are some of the negative items that impact your credit score.
Negative Items that Impact Your Credit Score
Several types of financial issues can be reflected on your credit report. Most stay on for 7 years. They include:
- Late payments. These are bills like credit cards and store accounts that are reflected as 30, 60 or 90 days late. A single payment that is 90 days late can sink your credit score, as can multiple late payments. A single 30-day or 60-day late payment will cost you a few points, but is not as urgent.
- Charge offs. When you are more than 180 days late with a payment, many creditors will write off the debt. If they have to do that, it’s noted on your credit report.
- Charged-off debt is often sold to third-party debt collection agencies. Even if you pay the debt, it is still reflected on your report.
- If you fail to make payments on your mortgage, your lender will take steps to repossess the property. A foreclosure on your report can prevent you from getting a mortgage.
- When you miss payments on assets that you’ve borrowed money to buy, like cars, boats or recreational vehicles, they can be repossessed and the action noted on your credit report. This impacts your ability to get a loan in the future.
- These show that you were taken to court and sued for the debt that you owe.
- Liens are a claim against your property that are assessed when you have unpaid tax debt.
- The most damaging item you can have on your credit report, bankruptcy shows that you took on too much debt and were unable to pay it back.
All of these negative items will bring down your credit score and potentially cause lenders to reject your application for credit. The specific impact they have depends on how recent the item was added and the severity — in other words, a 90-day late payment will incur higher damage points than a 30-day late payment. Now that we’re clear on the negative items that impact your credit score, how do you go on about fixing them?
Removing Items From Your Credit Report
It is possible to get items taken off your credit report, especially when they are inaccurate. According the Federal Trade Commission, about 20% or 1 in 5 consumers have at least one incorrect notation on their credit reports that could be removed.
You can dispute items on your credit report, but it can be a time-consuming process. By working with a credit repair company like Lexington Law, you can get help with credit disputes by experts who have experience and knowledge in working with consumers on improving their credit. Lexington Law can also assist with other steps for removing harmful entries, including requesting a Goodwill Adjustment or explaining how to request a payment for deletion.
The best way to ensure all negative items that impact your credit score are correctly repaired it’s to get help from a legitimate professional firm.
How Lexington Law Can Help With The Negative Items That Impact Your Credit Score
Lexington Law has 25 attorneys in 19 states and a skilled team of paralegals and assistants who work to analyze and make needed changes to your credit report. The average client sees 10.2 negative items removed from credit bureau reports in a 4-month period, though every case and client are different and your results may vary.
With Lexington Law, you can choose one of three main plans that covers the amount of help you need. The firm has a four-step process that detects problems and communicates with the credit bureaus to remove inaccurate information. Higher plans like the Premier plan includes daily monitoring of your credit score and help with making additional improvements that can increase that score.
If you have poor credit but don’t know how to tackle the issues with your credit report, you need help from Lexington Law. As a law firm, they are subject to legal ethics and will never ask you to engage in questionable activities to fix your credit. They’ll do it the right way. And they can help you fix and understand all the negative items that impact your credit score.