Business Development

More people are getting aware of the importance of credit reports and scores due to the financial crisis the world is experiencing. Aside from that, credit interest has increased while credit limits decreased. Credit card companies also cancel inactive accounts to make up for their losses due to rising defaults and delinquencies.

Credit card spending is becoming costly too for consumers because of the stated reasons above. In these times, maintaining a good credit score is crucial in obtaining reasonable rates and offers. A person with low credit score may find himself struggling to keep up with the payments of his credit bills.

As a consumer and credit card user, you must know the things you should avoid to keep negative information away in your credit report. Credit scores are based solely on the information contained in credit reports provided by credit bureaus or credit reporting agencies.

Negative information stays in your credit history for a minimum of seven years according to the Fair Credit Reporting Act (FCRA). So expect that they have a long term consequences in assessing your creditworthiness. A good credit however stays for 10 years which is very beneficial in your part.

Here is a list of negative information you would not want appearing in your credit report that can lower your credit score and the amount of time it stays there starting from the date they were filed.

- Delinquencies or late payments or collections-7 years
- Denied Loan or Credit Application or Inquiries
- Bankruptcy-ten years
- Lawsuits or Judgments such as records of arrest, misdemeanor complaint, indictment, or conviction of a crime-seven years
- Foreclosure-seven years
- Charge-offs-seven years and additional 180 days
- Paid tax liens- seven years from the date of payment
- Unpaid tax liens- fifteen years
- Student loan defaults-seven years

Cancelled credit accounts on the other hand affect your credit score especially if you cancelled the account you have been using for the longest time. A large portion of your credit history will be wiped out. This also makes an impression that you are experiencing financial difficulty thus, hurting your creditworthiness.

Credit inquiries also show up in credit reports. A higher number of inquiries may not do you good because statistical studies show those who have multiple credit inquiries are associated with high risk of default.

It is always wise to check for errors. Usually these errors contribute to a lower credit score. In a study conducted by the National Association of Public Interest Research Groups, almost 80 percent of credit reports contain errors. This is very alarming indeed. To countercheck, get your free credit report every twelve months from credit reporting agencies. You can now also access your credit scores online.

Read tips on how you can improve your credit standing and curtail credit card overspending. Having the knowledge about the things associated with your finances can add up to your confidence that you can properly address financial woes.

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