What Data Can Damage Your Credit Report?

Managing your credit report is much like playing a game of chess where only the right strategy ensures positive results. Numerous factors affect the overall score provided to financial parties assessing your ability to manage and repay a line of credit. This report is one of the main resources used during a loan assessment making it important to not only know what is on it, but also to keep negative items from becoming part of it.

A few issues are looked at as higher risk such as missed payments, high card balances, and bankruptcies. Other shown items could be the direct result of an error or discrepancy that is best alleviated as quickly as possible to prevent a bad score. Obtaining the report is the first step in becoming informed about your current standing and is essential for ensuring the information being provided is correct. You are entitled to one copy each year at no charge, but can request copies more frequently for a small fee.

Once you receive your free credit report, take the time to review all listed information and seek out discrepancies like an unrecognizable account or other data that could point to a case of mistaken identity or theft. These need to be discussed with the agency or bureau immediately for research and correction. Large score differences between agencies can be an indicator of discrepancies as well. This could be due to an actual mistake or simply because the creditor did not provide the data to all three companies. Higher scores show a better financial standing for approval.

These items have a negative impact:

  • Making late payments
  • Missing payments
  • Maxed out or near balance cards
  • Bankruptcy
  • Foreclosures
  • Liens
  • Unemployment
  • Substantial credit line requests

A lender will look at certain factors when evaluating you for a loan or line of credit. Check this information annually at a minimum to make certain payment history, outstanding debt information, dates, and inquiry counts are correct. Avoid negative actions and fix discrepancies as soon as they are known to avoid rejection due to incorrect data.

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