Credit Reports Can Help And Hurt By Charles Essmeier At Isnare.com Ezine Articles

As time goes on, people are becoming more and more aware of the importance of both their credit score and credit report. These two pieces of information are essential tools for lenders or creditors, who use them to decide whether or not to grant credit or a loan to a consumer. Higher FICO scores and reports with positive entries tend to lead to credit; low scores and negative entries have a tendency to lead to declined applications. While individuals may understand the significance of credit reports, they may not be aware of what kinds of entries appear on the report or how long they stay there.

Although the credit score offers a quick summary of a potential borrower's financial standing, it's the report that offers all of the details that lenders or creditors would like to see. Prior debts, car or truck loans and mortgages are recorded there, along with bankruptcies, property tax liens and so on. If you have a credit card, it's listed. If you had a car or truck loan that you paid off five years ago, it's on your credit report, and the report will indicate whether you paid promptly and completely.

Negative entries on your report will consist of things like unpaid income tax liens, bankruptcies, and unpaid home loans or credit card debt. These are "red flags" that are likely to grab the attention of lenders rather quickly. If you have a couple of negative entries and a so-so credit score, you may find it quite a task to acquire additional credit. On the positive side, negative entries vanish from your credit report after seven years, except for Chapter 13 debt relief filings, which stay for a full a decade.

Good entries on your report will include repaid bills, current credit accounts in good standing and dormant accounts. Contrary to common belief, positive entries do not stay on your credit report forever. Current accounts stay on your report for as long as you have them, with additional entries if you make late payments. Closed accounts stay on your report for a maximum of a decade. After that, they are removed from the report.

The key to a good credit report is always paying your debts in full and on time. Prompt payment of your bills when they are due will also help you maintain a solid credit score. If you have bad entries, they will disappear in time, but positive entries from open credit card accounts will stay indefinitely. It is worth your while to make the effort to pay your bills promptly in order to keep your credit score in good shape.

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