Credit mistakes happen and when they do, you should find out how long the negative mark will last and what moves you can take to get past the damage on your credit reports. It is important to not go crazy and check your score from multiple credit bureaus. Stick with one of the main three (Equifax, Experian, or TranUnion) and only check your report’s status twice a year.
What “mistakes” are we talking about?
- Missing payments and not paying your bills on time will create a downward spiral. Negative marks will appear on your report if you are at least thirty days past due and may stay there up to seven years. The later the payments, the more damaging it gets. The best way to fix this problem is to pay as soon as possible. If you do not have a history of late fees, you can call the credit card company and ask if they can wave it. There is no harm in trying. As long as you stay on top of your payments, positive information will start to eliminate the late fees.
- High credit utilization, or using too much of your credit at once, is not a good idea. You should never use over 30% of your credit limit at a time. If you are, take note that it only takes one month for this to affect your report since that is how often credit card companies send balance updates to the three major credit bureaus.
- It is not a terrible idea to apply for credit when you need it, however this will bring your credit score down a few points. Do not apply for more credit if you are waiting for your score to bounce back.
- If you do not pay your debt by the agreed date, the lender will give up and charge your account off. This could drastically damage your credit score and stay on your credit report for seven years. It’s vital that you pay this debt off or negotiate a settlement, because there is a chance you could be sued over this issue.
- If time goes by and you miss multiple payments, a creditor will send your debt to a debt collector. This will create a serious negative mark on your credit and will take years to eliminate. The best way to settle this issue is to create a payment plan with the collection agency. It will not eliminate the negative mark, but it will eliminate the possibility of being sued.
- Applying for bankruptcy has different effects on your credit score, depending on which type you file for. For instance, Chapter 7 bankruptcy could stay on your report for ten years. It is important to re-establish credit if this is a decision you make. You will most likely not be able to apply for credit, but you may be able to take out a credit-builder loan.